Corporate Market Data Renewal

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SIG University  Certified Sourcing Professional  (CSP) program graduate Jason Feldman provides an example of   corporate market data renewal and how it applies to sourcing.

As part of the CSP course requirement, I wish to apply some lessons from this ten-week course and explain my role as a Strategic Market Data Sourcing executive at The Bank of New York Mellon Corporation. I plan to take us through a corporate market data renewal example and will touch upon course material from €˜Week 2 ‘ (Strategic Sourcing_2020) and €˜Week 9 ‘ (Cross Functional Teams_2020).

Financial Market and Reference Data are data issued by a trading venue or a data supplier, such as a stock exchange or a private company label, to inform traders, analysts, bankers, and investors about the latest prices of financial instruments such as shares, derivatives, commodities, indices, and currencies. The data provided may be real-time-delivered, historical, or a combination of multiple time series.  

Look at an upcoming contract data renewal for services utilized within the Bank of New York Mellon Investment Management organization. The data analyzed are benchmark indices used for portfolio management, data analyses, and reporting on external client portfolio holdings.  

As the strategic procurement negotiator for this renewal, there are multiple hats to be worn, and I will start by building a cross-functional business team consisting of the following:

Once the internal functional team is built and within the timeframe needed to allow for ample time well in advance of the contract expiry date, the €œPL € will initiate a conversation with the supplier to review the data services that are up for renewal/review. After this conversation, a cost proposal is sent to the PL. As often is the case, the initial proposal for the renewal of services could be inflated. It should be considered a €œfirst-pass € renewal offer.

Before socializing the expected first-pass fees, meetings are scheduled with the LOBC, LOBF, and MDS to review internal data inventory and usage across the services that are up for renewal. A common practice could be checking the vendor usage statistics for the licensed data users if warranted. The collective team must review and understand the current spending across the bank for this supplier, leveraging economies of scale where applicable, and delve into the certification of data usage requirements to ensure proper right-sizing of the spend contract, where applicable.

Conversely, the PL will lead the conversations and present opportunities for data switch costs by increasing services consumed or offering up alternate data supplier sources.  Once the PL has a handle on the businesses ‘ user requirements, the conversations then turn to include the supplier and work towards a mutually agreeable fee for the contract renewal.  

This effort will take a bit of time as requisite approvals from each business stakeholder cost center manager (i.e., financial controllers) is a core requirement. An element of internal cost allocation wrangling also could occur, sometimes delaying the contract signature process. However, this could be avoided by the PL with clear and detailed communication strategies at the start of the project review/renewal.

One line of business stakeholder approvals has been granted. The PL will take the already-reviewed and approved contract documents through the signatory process, requesting the vendor to execute them first. The contract and deal renewal are finalized.

The  Certified Sourcing Professional (CSP) Program  is a 10-week course that focuses on the hard and soft skills of sourcing, including strategic sourcing and outsourcing methodologies, as well as best practices in negotiations.

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