April 1, 2020
Refinitiv report on alternative data – a new dimension of data – calls for industry standardization amid challenges
Building an open and trustworthy alternative data ecosystem requires providers to take the following actions:
- Document data sets, including key metadata standards
- Describe the quality, coverage and known limitations of a data set
- Represent basic data types, dates, and use of common data formats
- Identify entities such as organizations, geographic areas, products
- Develop codes of practice and technical methods for Web scraping and other forms of data collection
New York/London – Building on its commitment to connect and empower the global financial community through data and analytics designed to add greater client value, Refinitiv today announced the findings of its ‘A New Dimension of Data - Building an Open and Trustworthy Alternative Data Ecosystem’ report in collaboration with Open Data Institute (ODI).
The release of the alt data report comes at a time when our world is challenged with understanding the enormity of available data and information. Investment managers, traders and investors are tasked with finding the right data, making sense of it, and ultimately actioning it. Unstructured information, the explosion of alternative data, and the need for trusted sources makes an already daunting task even more complex.
According to the report, with over a thousand purported alt data sources, hundreds of case studies and millions in global spend, the alt data sector seems to be gaining traction. The alternative data market, however, remains a very small part of the multibillion-dollar market for access to stock market and other financial data. While the governance and norms for the licensing and distribution of traditional data are well established in many countries, the alt data market is at an early stage. Best practices, codes of practice, regulations and standards have not yet been fully established.
Enabling the integration and use of such a disparate set of data sources will require the development of a new set of standards. The report addresses key considerations for understanding and standardizing alternative data, including:
● What is alternative data
● How is alt data currently accessed, used and shared
● Ethical and legal considerations in alt data
● Improving access to alt data
● Recommendations and Next steps
Austin Burkett, Global Head of Quants and Feeds, Refinitiv, said: “The rise and success of quantitative analysis and investing using alternative data has taken the broader financial community to an inflection point when it comes to understanding, sourcing and applying these data sets to add greater insight and investment value. At Refinitiv, we believe that alternative data ought to be standardized and where possible, normalized in order to improve data quality and reliability to better serve clients with the highest ethical and legal considerations.”
Jeni Tennison, CEO of the ODI, said: “Working in collaboration with Refinitiv on this Alternative Data report has allowed us to investigate an emerging data ecosystem: data used by investors to help evaluate a company or investment that comes from new and unique sources. There is a market for this. For example, some companies are analysing real-time sentiment data, in the form of positive or negative social media posts and making predictions on company performance before any traditional data is released from the company. However, we have found that the ecosystem is struggling from a lack of standards and transparency, creating issues around privacy, intellectual property, and trust.”
“In order to build an open and trustworthy alternative data ecosystem the ethical, technical and practical issues need to be addressed. In the report we highlight tools such as our ‘Open Standards for Data’ handbook, which can help drive adoption of standards, and our Data Ethics Canvas, which can help organisations identify and make decisions about potential ethical issues,” added Tennison.
The alternative data report was written using extensive desk research, user research interviews with 13 professionals in the alternative data space and an expert roundtable of 12 participants. To download the report, ‘Building an Open and Trustworthy Alternative Data Ecosystem’ please visit: http://solutions.refinitiv.com/AltDataEcosystem
About the Open Data Institute
The ODI was co-founded in 2012 by the inventor of the web Sir Tim Berners-Lee and artificial intelligence expert Sir Nigel Shadbolt to show the value of data, and to advocate for the innovative use of data to affect positive change across the globe. Headquartered in London, the ODI is a non-profit, non-partisan company with an international reach. We partner with businesses and governments to build a world where data works for everyone. For more information, visit: https://theodi.org