Burton Taylor: Sentiment Survey Predicts Positive Growth for 2017

According to the survey, respondents from vendors, end-user firms, investors, analysts and consultants expect organic growth of 1.36 percent over last year’s spend of $27.5 billion, before the impact of any price increases, which could add another two to three percent increase, says Douglas B Taylor, founder and managing director of Burton-Taylor, which was recently acquired by TP Icap.

“I believe that buyers and suppliers … feel that the market has stabilized, and that after a period of so many drastic cuts, that uncertainty is now gone,” Taylor says. However, he warns that this doesn’t necessarily reflect companies thinking about growing their business. “I don’t think it translates to growth; it translates to less contraction and less downside risk, but it doesn’t necessarily translate to a stronger upside.”

Of the different data industry segments, pricing and reference data services—indeed, “anything related to regulation and risk management”—lead the way in projected spend, with respondents forecasting a 2.97 percent increase in spend on pricing and reference data, not including valuations.

“That’s the highest forecast growth rate for any product segment in our surveys, ever,” Taylor says. “That tells me that the market expectation is that pricing and reference data feeds will continue to be… the fastest-growing products in the market.”

He says much of this growth reflects a continued focus on meeting the demands of new regulations—particularly MiFID II in Europe, though the survey also predicts a renaissance in other economies next year, with Latin America, the Middle East and Japan expected to “bounce back a little,” potentially prompting vendors to adapt the composition of their products.

Though Taylor emphasizes that the survey is an indicator of industry sentiment, rather than a scientific study, he says its results have historically proved accurate. “If sentiment is up, usually [actual results] are up. And if this says one segment will grow faster than another, it’s usually correct,” Taylor says, adding that this year’s sentiment is definitely more optimistic than pessimistic—especially given the economic woes of recent years. In fact, Taylor says that in prior years of running the survey, predictions about the upcoming year have always been more positive than those about the current year. “It’s always been a case of ‘This year will be tough, but next year will be better,’” he says. However, for two of the past three years, that has been reversed, with respondents feeling more positive about the current year, he says, possibly reflecting doubts about whether the size of the data industry “pie” will grow overall.