Alternative Data News and Insight

Alternative data platforms represent an increasingly common source of data, as entrenched market participants such as Bloomberg acquire smaller vendors or rights to redistribute their data. Regardless of the differences in business models across platforms (e.g., AWS, Bloomberg, FactSet, etc.), each platform represents a challenge for buyside compliance teams, given the open-ended nature of the data these platforms provide. This challenge is likely to grow as data providers consolidate proven data.

Buying alternative data means taking on a new counterparty in a vendor relationship, with broader risks than insider trading and personal data, which tend to dominate the risk assessment.

Many buyers emphasise legal and compliance tasks at the outset of an alternative data deal, with a lengthy diligence and contracting process. But what happens in the weeks and months after the contract is signed? Buyers remain subject to ongoing compliance requirements, products break, contractual terms are triggered, etc. Legal and Compliance teams should periodically re-assess vendors – before they show up in the news.

As transactional data providers expand into new geographies such as the UK and EU with information derived from open banking, rewards apps, and email receipts, buyers should consider key concentration risks in diligence and contracting that are particular to expensive transactional data.