Key Takeaway
In the ever-evolving search for the alpha, financial institutions and investment managers are diving deeper into alternative, or external data, to enable better and more competitive decisions. A key signal of this industry’s rising significance is Nasdaq’s recent acquisition of alternative data firm Quandl.
This week, Nasdaq announced acquisition of leading financial information data provider Quandl, as part of a plan to integrate its technology into an analytics hub inside Nasdaq’s global information services division, which provides information and analysis to investors. With this move, the firm has made a definitive statement about the rising significance of alternative and non-traditional data sets in finance.
“Investors today are demanding actionable intelligence from new and expansive data sources at an increasingly rapid rate,’ Quandl CEO Tammer Kamel said in a press release.
Bjorn Sibbern, Executive Vice President and Head of Nasdaq’s Global Information Services, highlighted the importance of deriving insights from external data. “Quandl will allow Nasdaq to partner more closely with the investing community as the industry continuously seeks ways to evaluate an endless supply of information to drive new insights, investment ideas and deliver alpha.”
Exchange operators like Nasdaq have long relied on their core trading business model, but in our new digital reality this is no longer enough to enable them to compete. These firms are beginning to diversify into new
Rising trends: alternative data takes hold
Does this mark the end of an era for trading companies like Nasdaq?
This strategic move shows the firm has been looking out at rising trends in the market. Particularly for hedge funds, the alternative data space has been steadily gaining momentum as funds scramble for a competitive edge in the form of data insights. Acquisition of one of the market leaders in the alternative data space enables Nasdaq to enter this space in an effort to remain competitive.
Traditional data sources are no longer enough to power competitive decisions in our increasingly data-driven economy. Investors crave information which is new, unique and forward-looking in order to inform their decisions, as more and more firms bring on ‘quant’ traders and leverage AI to sift through external data for new clues.
The alternative data market in finance has seen a steady rise over the last few years. Research consultancy Opimas estimates that investors are spending about $5B a year on alternative data, and expect the industry to grow 30 percent annually.
As well, ‘Alternative data’ conferences and marketplaces, like Eagle Alpha, Neudata and Bluefin, are exploding in popularity to match hungry investment managers with a growing network of vendors and suppliers who can provide increasingly specific and unique datasets.
As a result, firms are racing to hire analysts and data scientists who can help them make sense of these new streams of data, and bringing on support through external vendors and AI-driven platforms like Outside Insight, to gain a continual edge in an increasingly competitive environment.