A Deep, Broad Stream of Data
Deutsche Börse is quenching the thirst of innovators with a flow of data from source, reaching across assets and markets.
Anya van den Berg, vice president of data and analytics, Dr Peter Ho-Spoida, data and analytics strategist, and Dr Sven Wohlfarth, director data services operations, discuss how the appetite for new ideas across the buy and sell side can be better supported through innovative new data offerings.
How was innovation manifested at TradeTech 22?
Dr Peter Ho-Spoida (PHS): I saw two main innovation themes at TradeTech. The first is a need to access high quality data, which is ideally straight from the source and ready for use. The second theme was accessing tools to analyse and make sense of this data.
We also heard from panellists at TradeTech that up to 80% of their efforts are put into cleaning and acquiring data for their specific needs. A lot of valuable time goes into processing, when it could be done by other service providers.
How are you addressing that?
Dr Sven Wohlfarth (SW): As a market data provider we historically shipped raw data to our customers. However raw market data and the high volumes of it may be complex to use for some customers. So, we wanted to further help our customers to extract valuable insights from raw data. In 2018 a bank came to us with a very specific problem, asking for our help. We looked into it and a couple of months later, we had developed a product called Eurex Flow Insights which now, after some improvements, has become the core pillar of our analytics regime.
PHS: We have loaded our high quality raw data into A7, our analytics platform, and made it ready for use for our clients. They can directly start adding value without worrying about processing, cleaning or any other form of data massaging. This fits nicely with the automation and digitisation trends, which we have also seen. And it’s driven by client demands. The first one is really coming from the tier one institutions, already at the cutting edge of this process. These clients want access to raw data. They’re doing all the analytics themselves. The second camp consists of smaller firms who want to benefit from these tools but don’t have the capacity to build the systems themselves. They rely on vendor-based solutions coming from exchanges like ours.
Anya van den Berg (AvdB): We have just announced our co-operation with CME Group and will have their data in our A7 cloud environment, so that you can pull algo results across two of the world’s largest derivatives markets within one interface. That’s a really compelling step for quants and data analysts, being able to interrogate it across the value chain and being able to get access to market data for both supporting roles as well as traders. The product reconstructs the order book so customers can quickly run custom or standard algos and pull down the results via a high-speed API in seconds into their Excel or into their quantitative databases.
What has driven changes in data use this year?
AvdB: This year we have seen a huge shift in focus towards the futures and options market. Clearly, those instruments provide elements of risk management that can’t be achieved using purely cash instruments, and in an environment which is inflationary, and subject to considerable volatility, that has supported increased engagement in the derivatives space.
As we see strong customer demand this gives us resources to reinvest in our unique services.
What do you see driving growth in data – either deeper or wider – going forward?
PHS: Clients are always thirsty for new sources of data. That is the continuous quest for entrepreneurs and innovators. In the equity space, data offerings have become crowded for years so there is little room to squeeze out something different and unique. I think it will be newer asset classes, including crypto, where people really lack information that has the data quality one expects for professional investment and market making.
Another aspect of this is alternative datasets like news feeds, sentiment feeds, or even satellite images. We see these conversations going on today across the industry. In many cases ideas come from outside of the industry, so providers of satellite images are trying to explore financial use cases with us today, having covered other industries already and wanting to extend into financial services and in energy trading. I think this is a promising area. Imagine how you can monitor the situation at physical assets and within energy consuming areas during winter, if they were covered by snow. The potential applications are quite broad, and several use cases come to mind. I think the big players are already consuming this and it is now being standardised to make it accessible to a broader range of clients.
How is your offering competitive in existing and new markets?
SW: We have multiple markets, and asset classes with all of that high quality data coming from source, and in different variations in order to cater for different customers. This is where we provide significant value to the market. To add to this point, we also have a long history of data in cloud storage, making it really easy to work with. The CME agreement is totally unique, so we now have two of the biggest derivatives exchanges in one amazing analytical tool.
PHS: Primary exchanges have an established and familiar market structure for customers. As we see customer expansion to other asset classes, the big advantage of taking solutions from the primary exchanges is this existing framework and the knowledge that the data is directly from source. Our T7 technology is a great example, where Deutsche Börse is trying to build out good liquidity, to provide best-of-breed trading solutions with new products. Energy and crypto are also an important focus for us in the near-future.
AvdB: We have a team of data scientists sitting across Frankfurt and London, who are dedicated to building and enhancing our analytics suite of offerings. They listen to customers first-hand and use this feedback to prioritise our roadmap and aggregate all the unique data available to us across the Deutsche Börse Group into ingestible, meaningful products to ultimately optimise our customers’ trading strategies.