Hey, it's Hasina from Datarade and welcome to Data explained.
Today, I'm going to be talking about financial market data.
This data type is really important for understanding information on financial instruments and assets traded across hundreds of global markets.
So what exactly is financial market data and how do data providers collect this information?
Data providers may collect information about a particular financial instrument from a trading venue. Let's take an example of stocks.
This data might include the identifier, which is the ticker symbol. This is an abbreviation for listed security on an exchange. It can also include the location of the trade. So which stock exchange like the Nasdaq or New York Stock Exchange?
It can also include details of the latest offer. This can include;
- the most recent bid price, which is the price of which a buyer is willing to pay for a security
- the most recent ask price, which is the lowest price that a seller is willing to sell a security for
- the time of the date is quote and trade and the price and volume of the last sale.
Some information may also come from companies such as private investment firms. This means that data providers are able to provide data that is not publicly available. This data might include information about company investments and previous trades.
Some information may also come from regulatory filings such as an S.E.C. filing, a financial statement submitted to the U.S. Securities and Exchange Commission. Public companies and broker dealers submit this information, making data on company financials and metrics on individual securities available.
Now let's look at some use cases and examples of where financial market data might be used.
Investors might use information from regulatory filings to understand about the activities of companies they are evaluating for potential investments. Data from exchanges can also allow investors to understand where the market is, so they can make decisions based on facts and forecasts for future performance.
Another potential user group for financial market data would be wealth and asset managers. They might use it to calculate the worth of their clients assets so they would be able to guide their clients and help them with their financial planning.
Last but not least, another example would be traders. They might gather and assess market data to understand market risk on position so they know whether to exit or enter a trade.
So now you know what financial market data is and who might use it. Now let's look at what you should consider before purchasing financial market data.
Understanding which delivery frequency you need is important for your use case. Markets can be extremely volatile, with actively traded securities fluctuating in price every single second. Real time data is usually important for day and high frequency traders, so they know exactly where the market stands when trading.
It's also important for investors so they can base investment decisions on the most up to date information.
Delayed or end of day data is usually enough information for investors with a long term portfolio, which they don't intend to sell anytime soon. They don't necessarily need up to date information, providing real time data which would require technology and effort.
Global financial market data comes in from data venues all around the world. So it's worth checking whether your data provider can give you high speed access to global market data that is both reliable and accurate.
Once data comes in from data sources across the world, data providers may offer additional services such as data cleansing, data analysis and historical data, which would allow you to project price trends and drive strategies for future trade. This is really important because the amount of information you have at your disposal will affect the quality of decisions you make.
That was all for this time, see you next week!
P.S. In case you have a business case you are looking to solve with financial market data, you can find suitable datasets here. The platform allows you to browse, and compare data vendors and their data sets.