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Asia bourses risk missing the data train

Quinlan & Associates argues Asian exchanges aren’t monetizing data—but can they replicate Western peers?



Photo by Chiang Kuo on Unsplash

A new report by consultancy Quinlan & Associates warns the stock exchanges of Asia Pacific are neglecting building out monetizable businesses around data and analytics.

“By not establishing an effective monetization model for exchange data, we estimate up to $4.23 billion per annum in incremental revenue from the provision of information services will be left on the table by Asian exchanges by 2025,” says the report, released November 25.

Ben Quinlan, the consultancy’s founder, says it may be too late for most of the region’s bourses to make the splashy acquisitions that Western exchanges have consummated.

He suggests exchanges could look instead to build out their own data platforms.

In April 2019, Charles Li, the CEO of Hong Kong Exchange and Clearing, floated the idea of positioning HKEX as a data marketplace—but if the exchange is cooking up such a scheme, it has yet to produce any dishes.

Buying growth

Western stock exchanges such as the London Stock Exchange, Nasdaq and Deutsche Börse have made big bets on data and analytics to maintain growth.

They have done so through acquisitions as well as internal builds. LSE is still in the process of buying Refinitiv, while Nasdaq bought alternative-data player Quandl, Intercontinental Exchange (owner of NYSE) bought Interactive Data, and Deutsche Börse announced just on November 17 that it would acquire Institutional Shareholder Services, a major provider of ESG-related data.

There hasn’t been an equivalent play in Asia, although Singapore Exchange has acquired index provider Scientific Beta along with trading platforms and a variety of fintech companies.

Asian exchanges may not have needed to pay for new growth engines. They have been more profitable than Western peers, thanks to the region’s economic dynamism and healthy transaction pipelines. HKEX in particular has been a machine, pumping out one mega China-linked IPO after another. In the U.S., in contrast, IPOs have been in decline, and Western exchanges have already squeezed out as many derivative products as the industry needs.

Missing out?

As a result, though, Asian exchanges are missing an important source of revenue. Quinlan says LSE in 2019 derived 44 percent of its revenues by the sale of information services. On average, data services account for 28 percent of revenues, versus only 10 percent in developed Asia and a mere 6 percent in emerging Asia.

“It’s down to an old-fashioned mentality,” Quinlan told DigFin. Alternative-data vendors in the U.S. have enabled investors to come up with new investment products or alpha-generating strategies, but such innovation has been scarce in Asia outside of mainland China.

He reckons the region’s exchanges can capitalize on other trends, including rising ETF flows, bigger domestic listings, and savvier demands from investors, to justify a data-monetization strategy.

While it is likely that robust listing and trading services have made Asian exchanges complacent about data and analytics, it is not obvious what they should do now.

Consider that on today, November 30, S&P Global agreed to merge with data vendor IHS Markit, valuing it at an eye-popping $44 billion.

Western exchanges have plucked the juiciest fruit; and Asia does not boast data companies like Quandl or ISS. There is huge demand for alt data, by the region’s firms and by global players looking for an Asian edge—but vendors have already responded. And whatever may be left to acquire will be super expensive.


Quinlan says the alternative to a big acquisition or an internal build is to create marketplaces—which would be hard, expensive, and could set exchanges in direct competition with the likes of Refinitiv and Bloomberg. This means building a technology platform in which fintechs, data providers, and financial institutions could intermix, collaborate, and buy and sell. Operators would collect steady fee or subscription income, a nice diversification from revenues from trading.

Sounds great – but what data would be generated or packaged in such an environment? Industry executives tell DigFin if it’s data from listed companies, that could create conflicts of interest among the exchanges that are meant to serve as quasi-regulators (given that in Asia, most exchanges are monopolies, either outright or de facto).

Besides, if exchanges are only trying to package the data they already generate, like pricing and listco actions, they’ll find vendors have already done so, from traditional players like Bloomberg to new entrants like AWS.

It’s down to an old-fashioned mentality

Ben Quinlan, Q&A

For example, ASX has introduced DataSphere, a “data-science platform” meant to aggregate data providers, analytics experts and financial institutions. But so far this mainly involves the exchange’s own data. It shows ASX is thinking about packaging data, but it will need to attract more alt-data sources and create new commercial propositions if this is to be a money-spinner.

SGX is taking this more seriously. On August 31 it announced named Mark Makepeace an independent director. He founded FTSE Russell, the index provider, in 1995 and spent nearly a decade running LSE’s information services. If SGX is going to make indexes into a business, Makepeace is the right person to have on board.

Then there’s HKEX, which has focused on listings and trading services around Stock and Bond Connect programs linking it with mainland bourses. HKEX just announced it is deploying Synapse, a blockchain-based means of connecting global investors to China’s T+0 settlement environment.

This could in turn generate data that the exchange could monetize – although it has not done much with its existing “exhaust data”, generated from pricing, listing and corporate data generated by its listcos and users.

ASX is trying to do this with its Chess post-trade infrastructure replacement, to be based on distributed-ledger technology. Unfortunately, right now ASX is digging itself out of its second major trading-system failure of 2020, and its Chess replacement deadlines keep jumping into the future. It may not have the headspace to think about futuristic analytics projects.

Better than China?

HKEX has an altogether different challenge: its increasing dependence on China for listings and for flow. That’s because when it comes to big data and analytics, nobody beats the Chinese. Chinese vendors and fintech companies from Alibaba and Tencent on down have the most sophisticated tools.

For a China-dependent entity like HKEX, should it build out its own data capabilities, even its own data marketplace – or just pass through the products on offer in the mainland? 

The answer may come when HKEX selects a new CEO to replace Charles Li, who has stepped down. The exchange could appoint a tech-savvy visionary. Or it could appoint a politician focused on greasing mainland relationships. It might make sense to keep the focus on attracting giant listings – but it’s not the choice that prioritizes Li’s trial balloon regarding a data marketplace.

Asian exchanges may have old-fashioned mentalities around the need to provide ancillary services to investors…but they are also experimenting with digital assets more aggressively than Western counterparts. There could be other routes to innovation than just acquiring big data firms.

The reality of data is that any exchange that wants to make money from it has to go big. Existing pricing data, the bread-and-butter stuff, is already embedded in vendor databases. That train has already left the station.

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