How to manage Market Data costs.

How to Manage Market Data Costs

Market data has become one of the most stubborn cost lines in capital markets, partly because it is both mission-critical and surprisingly easy to let sprawl. Global spending on financial market data and news reached $44.3 billion in 2024, rising 6.4% year on year, and the direction of travel is still up even as many firms are trying to rein in non-compensation spend.

Part of the challenge is that market data is rarely “one budget.” It spreads across desks, regions, vendors, and applications, with costs rising through contract inflation, new data products, broader distribution, and higher-frequency use cases that accumulate over time. Alternative data adds further complexity, introducing more sources to acquire, govern, and justify.

For many firms, the frustration is not that market data is optional, but that it becomes one of the largest non-compensation expenses without a clear view of who is using what, what it supports, or whether licensing still reflects reality.

This guide examines how firms regain control in practice, starting with how market data management provides the structure, governance, and usage visibility that cost-cutting tactics alone cannot sustain.

Why Market Data Costs Have Become an Operational Problem

The rise in market data costs is not an event, but a process. It is the cumulative result of fragmented ownership and diffused responsibility. Over time, the lack of central rationalization allows local justifications to pile up, creating a maze of overlapping feeds and redundant vendors. By the time it’s noticed, "flexibility" has quietly evolved into systemic waste.

Desk-level purchasing accelerates this drift. Front-office teams acquire data to solve immediate workflow problems, often outside a central market data function. These purchases bypass entitlement controls and contract oversight, yet lock in multi-year financial commitments.

The problem becomes most expensive when usage is unclear. Many firms cannot reliably see who is using which data, at what level, or whether that access is still justified. Entitlements persist after needs change, and systems continue consuming high-cost feeds by default.

Operational effort and regulatory pressure compound the issue. Manual reconciliation, audit-driven clean-ups, and growing expectations around data lineage and controlled usage add indirect cost and risk, turning market data into a compliance concern as well as a procurement one.

For most firms, the outcome is familiar. Rising costs are a direct symptom of an operating model lagging behind the current scale of market data. The framework that once worked has been outpaced by the sheer volume and complexity of today’s requirements.

What Is Market Data Management (and Why Cost Control Depends on It)

Market data management is a perpetual control system. Viewing it as a technology project miscalculates its nature, as projects have end dates while control systems require continuous calibration.

It is the process firms use to govern how market data is ingested, distributed, and monitored so that usage remains accurate, compliant, and aligned with both business needs and cost discipline.

The difference between management and administration is critical. Administration handles execution, such as provisioning access, processing invoices, and responding to audits. Management defines ownership and control by determining who should have access, at what data level, and when that access should be reviewed. Firms that stop at administration keep data flowing, but rarely keep costs under control.

When market data is not actively managed, spend drifts. High-cost entitlements persist after needs change, applications continue consuming data by default, and contracts renew based on historical assumptions rather than actual usage. In that environment, cost-cutting tends to be reactive and short-lived.

This is why market data management underpins sustainable cost control. By linking usage, entitlements, and licensing in a single framework, firms can align access with business justification and reduce waste without disrupting critical workflows.

Types of Market Data (and How They Drive Cost)

Market data costs are driven less by volume than by the type and granularity of data consumed. Different categories support different activities and carry sharply different cost profiles, even from the same vendor or exchange.

Pricing data is the most visible. End-of-day, intraday, and real-time prices underpin trading, valuation, and reporting. Costs rise quickly when real-time access is widely distributed or embedded across applications, especially where licensing is user-based rather than role-based.

Time-series data adds hidden costs. Historical prices are essential for risk and regulatory use, but are frequently duplicated across trading, risk, and finance systems. Identical data stored and processed multiple times increases infrastructure and maintenance spend without adding value.

Reference data and corporate actions are quieter cost drivers. Instrument identifiers, issuer hierarchies, dividends, and corporate events are consumed by systems rather than users, making expansion easy to miss. As regions and applications grow, subscriptions often scale without reassessment.

Granularity is the main cost multiplier. Level 1 data (top-of-book pricing) is sufficient for many users. Level 2 adds market depth. Level 3 provides full order-level detail and carries the highest cost. In practice, firms often license Level 2 or Level 3 data for users whose day-to-day needs do not justify it.

A simple example shows the impact. Fifty users licensed for Level 3 equity data at $25,000 each represent a $1.25 million annual commitment. If even part of that group could operate with Level 1 data at $5,000 per user, the savings would be substantial without removing access entirely.

Market data costs grow when data types, user needs, and licensing drift out of alignment. Market data management forces spend to mirror real-time requirements. It overwrites historical defaults with a rigorous validation of current needs.

Why Market Data Management Is the Foundation of Cost Control

Market data cost reduction fails when it relies on isolated actions rather than structural control. Contract renegotiations, licence cuts, and audit clean-ups can provide temporary relief, but without market data management, costs drift back as usage changes and new requirements emerge. Durable cost control only exists when governance and distribution are managed continuously.

Market data management enables this by removing redundancy and excess entitlement at the source. A central view of data sources, users, and applications exposes duplicate purchases and over-licensed access that often account for several percentage points of total spend, sometimes closer to ten percent, without reducing critical coverage. Access tied to defined use cases also limits entitlement creep, allowing firms to step users down from high-cost data levels as needs change.

The same structure reduces operational and compliance costs. Aligning usage, entitlements, and contracts eliminates repeated reconciliation work and shortens audit cycles, lowering exposure to penalties and remediation.

This approach breaks the link between expansion and expense. Firms scale their users and systems while costs remain stable; expenditure reflects current demand and abandons the legacy of historical defaults.

The 5 Practical Steps to Managing Market Data Costs

Market data costs only become controllable when they are managed continuously rather than addressed through periodic clean-ups.

First, firms need a clear inventory of usage, users, vendors, and spend. Most know the total bill but not who consumes which data, at what level, or why. Mapping this exposes duplication, unused access, and misaligned entitlements, often revealing immediate cost reduction opportunities.

Second, vendor and contract ownership must be centralised. When purchasing and renewals are handled locally, oversight weakens and subscriptions overlap. Central ownership allows demand to be consolidated, contracts to reflect actual usage, and new spending to be controlled.

Third, firms need a market data management platform that connects usage, entitlements, and cost. Without this, cost control relies on manual processes that cannot keep pace with change. A single view turns spend management into an ongoing capability.

Fourth, governance and entitlement controls must be enforced. Access that is permanent or rarely reviewed leads to entitlement creep. Tying access to defined roles and use cases ensures users receive what they need without excess.

Finally, usage must be monitored continuously. As teams and systems evolve, entitlements drift. Ongoing tracking allows early adjustment, evidence-based renegotiation, and prevents costs from persisting through inertia.

Best Practices for Ongoing Cost Optimisation

Sustained market data cost control depends on habits that keep spend aligned with real usage, not on periodic clean-ups.

Usage-based licensing discipline is fundamental. Access should be granted by role and use case, not by defaulting to the highest data level. A routine audit of usage against entitlements provides the leverage to reduce user counts and application access. This discipline maintains a tight link between expenditure and utility, even as business needs evolve.

Vendor audits and licence true-ups should be proactive rather than reactive. Maintaining accurate usage records and reconciling them continuously reduces audit disruption and prevents penalties or back-billing driven by mismatches between contracts and reality.

Automation is essential to scale this discipline. Automating usage tracking, invoice reconciliation, and entitlement management reduces operational effort and error, allowing teams to focus on oversight and optimisation instead of manual administration.

Managed services can further stabilise costs by converting variable operational workload into predictable spend, particularly where skills or capacity fluctuate, while preserving governance and control.

Finally, transparency across finance and compliance teams ensures cost decisions are evidence-based. When usage, entitlements, and spend are visible beyond the data function, budgeting improves and cost discipline becomes shared rather than siloed.

Market Data Management vs Other Approaches to Cost Control

Many firms try to manage market data costs through isolated measures that feel sensible but rarely last. The problem is not the tactics themselves, but that they address symptoms rather than the operating model that allowed costs to drift in the first place.

Contract negotiations without clear usage visibility are a common example. Pricing discussions may deliver short-term reductions, but when they rely on estimates or historical assumptions, savings erode as usage changes and contracts renew under similar terms.

Cutting licences without governance carries a different risk. Reactive access removal, often driven by budget pressure or audits, can disrupt workflows and trigger resistance from the business. When access is restored, it frequently returns at the same or higher cost, leaving no lasting structural change.

General data management tools also fall short when applied to market data. While effective for internal data, they are not designed to handle exchange licensing rules, entitlement structures, or usage reporting. This creates gaps between contractual rights and actual consumption.

Market data management sits above these tactics as the operating layer that makes them effective. By linking usage, entitlements, contracts, and governance in a single framework, it ensures negotiations are informed, access changes are controlled, and cost discipline holds over time rather than resetting each budget cycle.

Technology Considerations When Managing Market Data Costs

Technology choices play a critical role in whether market data cost control is sustainable or perpetually reactive. Evaluating platforms through a cost lens means focusing less on feature breadth and more on whether the technology supports visibility, governance, and long-term efficiency.

Usage tracking and entitlement management are foundational. A platform should make it possible to see which users and systems are consuming specific data sets, at what level, and how frequently. Without this visibility, firms are forced to rely on assumptions when allocating costs or adjusting access, which undermines efforts to keep spend aligned with actual need.

Vendor and contract reporting is equally important. Technology should support clear mapping between contracts, licensed entitlements, and observed usage, allowing firms to identify mismatches before they turn into audit issues or unnecessary renewals. This reporting also provides the evidence needed to approach vendor discussions from a position of fact rather than estimation.

Cost allocation and chargeback capabilities add another layer of discipline. When market data spend can be attributed to desks, strategies, or applications, it becomes easier to assess value and challenge demand constructively. Transparency at this level encourages more thoughtful consumption and supports better budgeting across the organisation.

Infrastructure considerations matter as well. Cloud-based platforms offer the ability to scale processing and storage in line with demand, avoiding the fixed costs and over-provisioning that often accompany on-premise environments. This flexibility helps firms absorb changes in data volume or usage without committing to long-term capacity that may not be needed.

Finally, total cost of ownership should be assessed over time rather than at the point of purchase. Implementation effort, ongoing maintenance, manual workarounds, and the cost of poor visibility all contribute to the true price of a solution. Technologies that reduce operational overhead and support continuous optimisation tend to deliver lower TCO, even if their upfront cost appears higher.

The Future of Market Data Cost Management

Market data costs are unlikely to stabilise on their own. Emerging trends introduce layers of complexity that transform disciplined management into a mandatory requirement.

Alternative data illustrates the shift. New datasets often come with unfamiliar licensing models and limited usage transparency, increasing spend while making value harder to assess across a growing and fragmented vendor landscape.

Artificial intelligence is starting to improve cost control. Usage analytics and anomaly detection highlight underutilized, high-cost data early. This insight empowers firms to optimize entitlements in advance and prevents a scramble once costs escalate.

Managed services are gaining traction as a way to stabilise both operational effort and spend. Outsourcing routine market data activities under defined service levels converts variable workload into more predictable cost, while preserving governance.

At the same time, demand for real-time data continues to push budgets upward. As more strategies rely on low-latency information, licensing costs can rise faster than business value unless access is tightly controlled.

ESG data adds further pressure. New providers and datasets extend beyond traditional market data, expanding the vendor landscape and reinforcing the need for consistent governance to prevent spend from fragmenting.

Conclusion: Turning Market Data from a Cost Burden into a Controlled Asset

Market data costs remain high despite negotiation and never decline through passivity. Sustainable reduction requires a fundamental shift in consumption, as contracts alone cannot offset organic growth.

Unmanaged costs expand with every new user, system, and data source. This unchecked growth eventually severs the link between expenditure and value. Firms that rely on periodic clean-ups or contract-driven fixes tend to revisit the same problems each budget cycle.

The difference is structural. Organisations that manage market data as an operating discipline, with clear ownership, usage visibility, and governance, are better able to control costs than those focused on tactical negotiations. Structural management makes it possible to understand where spend originates, challenge demand constructively, and prevent unnecessary costs from becoming embedded.

This is why market data management is no longer optional for cost control. Rising regulatory expectations and an expanding data landscape transform consistent entitlement management into a dual requirement for compliance and financial discipline.

The path forward demands a granular understanding of actual market data consumption across the organization. This transparency replaces the traditional cycle of blunt license cuts with targeted, data-driven optimization. Building that visibility and aligning governance to real use cases is what turns market data from a growing burden into a controlled and accountable asset.