What is Market Data?

Malcolm Tatum

"Market data" is the collective term used to identify information associated with the investment market. This includes information such as current rates of interest applied to specific assets, movement of stocks within given areas of the market, foreign exchange rates, and data collected from different trading venues. Access to market data is essential for investors, since the information provides the basis for conducting different types of trades, arranging for financing of loans and similar debt instruments, and in general managing financial assets to best advantage.

Market data is often provided to potential investors for analyzation.
Market data is often provided to potential investors for analyzation.

When it comes to stock options, market data is often provided in the form of some sort of data feed or message from the different markets. A traditional approach to this process is the generation of the feed using a device known as a ticker. The ticker provides the means of printing an ongoing hard copy of market activity using what is known as ticker tape. Each company traded on the exchange is assigned a symbol that identifies current price movements and essential data regarding bids and asks associated with the investment. In recent years, electronic versions of the ticker tape available at various financial web sites has broadened access to this real time information, allowing investors to make use of market data with greater ease.

In the stock market, market data is often shown on a ticker.
In the stock market, market data is often shown on a ticker.

Stock market data systems do more than provide the latest information to investors, dealers, and other interested parties. The information contained within the system can also be utilized to access the history of the marketplace, a benefit to many investors who like to know how a given investment has performed in the past before attempting to predict how it will post gains or losses in the future. Financial data vendors can often provide investors with access to historical market data when and as needed. Brokers and dealers are highly likely to include background information on an opportunity when pitching it to a client, allowing the investor to develop an informed opinion on whether or not to buy, sell, or hold a given asset.

While market data is often provided in real time, there are instances when the data may be provided on some sort of time delay. This may occur depending on what is happening in the marketplace. Unusually high activity can result in a slight delay as the ticker attempts to process all the inbound information and dispense it to interested parties. When this occurs, the feed may be stopped for a moment to allow tickers to finish the process of relaying the time-delayed data, then begin again once the necessary seconds or minutes have passed and the information is once again dispensed in a real time fashion.

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