As commercial models become more complex and data usage grows, a reactive approach to managing these costs is no longer sustainable.
That was the core message of a recent webinar, where Amjad Zoghbi, Head of Solutions Engineering, and Trip Wadleigh, Global Head of Relationship Management, shed light on the hidden inefficiencies in reference data management. More importantly, they outlined top ways firms can move from invoice-based cost control to a proactive, technology-driven approach that drives both financial savings and operational efficiency:
- Select the right commercial model
- Uncover stealth costs in data attributes
- Hunt down and shut down open data taps
- Stop paying for the same data twice
- Ensure hidden risk doesn’t lead to inflated costs
WATCH NOW: Webinar Recording - Mastering Reference Data Management (under 30 minutes)
Breaking the cycle of reactive cost management by exposing hidden cost drivers
Reference data costs are notoriously difficult to track. Unlike exchange or real-time feeds, these expenses don’t always present themselves in an obvious way. Instead, they are buried within vendor agreements, hidden in attribute-level fees or quietly accumulating in test environments.
“It’s not controversial to say that things are not getting simpler, or cheaper,” Amjad noted. “Prices have increased, models have grown more complicated and compliance aspects have intensified.”
With annual reference data costs reaching tens of millions for some firms, even minor inefficiencies quickly add up – sometimes accounting for as much as 25% in wasted spend.
Yet, many firms remain stuck in a reactive cycle, only addressing issues when invoices arrive – often too late to prevent unnecessary costs. Without real-time oversight, hidden inefficiencies go unnoticed, compliance risks build up and spending continues to spiral.
“Most of the time, clients manage reference data passively, waiting for the invoice at the end of the month and reacting to it,” said Amjad. “Invoices alone don’t tell you the full story. By the time a firm realizes there’s a problem, it’s already too late,” added Trip.
The solution? Shifting from passive invoice reconciliation to proactive, real-time control and governance. “Proactive, granular approaches drive cost optimizations far beyond simply reacting to invoices,” said Amjad.
Firms that rethink their approach and monitor data consumption in real time can unlock savings, strengthen compliance and tighten control of their data strategy.
The webinar highlighted five key areas firms must address to take control of their reference data costs and compliance.
1. Selecting the right commercial model: A costly guesswork game
The first step in cutting reference data costs is ensuring firms aren’t overpaying for the wrong pricing model.
Vendors offer a variety of pricing structures – metered usage, banded pricing, volume-based pricing, enterprise agreements, and per-attribute fees – yet most firms lack the tools to determine which model best fits their actual needs.
However, that shift requires more than just negotiation. It needs a clear understanding of how data is being consumed, which attributes are triggering additional fees and whether existing agreements make sense in the context of current workflows. Without that insight, firms are left making educated guesses – often to their detriment.
“They need to know how they’re using data, compare it to different pricing models and see which is the best fit,” Amjad explained. “For some clients, the difference in this area can be savings of 30% or more.”
2. The hidden costs lurking in data attributes
If commercial models present one challenge, hidden fees buried in attribute-level data present another entirely.
“Attributes aren’t visible in invoices, but they can trigger certain pricing categories and therefore entire pricing structures,” Amjad explained.
Many firms assume reference data fees are tied solely to the volume of securities or data calls, when in reality, specific fields – such as credit ratings, security identifiers or financial metrics – can dramatically alter costs. Because these are not explicitly detailed in monthly invoices, firms often fail to recognize where their spend is accumulating.
“We’ve seen cases where a single attribute – like a total equity field – is costing $100,000 a year,” Amjad noted. “If it’s not essential, why pay for it?”
Firms that analyze their data at the attribute level can eliminate unnecessary costs and optimize licensing agreements to avoid such six-figure surprises.
3. The problem with non-production data: An open tap on costs
Another major drain on reference data budgets is the uncontrolled use of data in non-production environments.
Development teams and automated test systems frequently make large data pulls, often unaware that every call to a vendor carries a price tag. The result? Firms end up paying for test environments as if they were live trading desks.
“Non-production environments can be an open tap,” Trip noted. “And the worst part? Most of this spend goes completely unnoticed… until the bill shows up at the end of the month.”
By the time finance teams detect the issue, the damage is done. Worse still, without a proactive governance framework in place, there is little to stop it from happening again.
“It’s amazing how often we do an evaluation and find non-production environments pulling expensive data,” said Trip. “When we show it back to the application owners, they’re shocked – they had no idea they were calling those fields.”
With real-time monitoring and automated rules, firms can avoid unintended costs by identifying high-cost test data usage, restricting non-production requests and set alerts to flag excessive data pulls before they spiral.
“It’s all about control,” Amjad added. “If you don’t have visibility, you can’t act.”
4. Cross-vendor overlaps: Paying twice for the same data
Many firms unknowingly buy data from multiple vendors, leading to redundancy and wasted spend. “It’s surprisingly common to see firms buying identical data from different sources simply because there’s no central visibility,” Amjad said.
This often occurs because teams manage separate contracts without realizing there are overlaps. While some regulatory requirements justify data duplication, in many cases, it’s simply a lack of transparency.
“We can track vendor overlaps and pinpoint the exact cost of duplication,” Amjad said. “Once firms see the numbers, they can decide whether the redundancy is necessary or just waste.” By auditing data flows and mapping vendor agreements, firms can often consolidate their sourcing strategies and negotiate better deals.
5. The compliance risk lurking beneath the surface
Beyond cost control, compliance presents another major risk.
Third-party data providers often embed their content within larger vendor feeds, meaning firms may be using licensed data without realizing it. This can lead to unexpected audits and retrospective licensing fees that significantly inflate costs.
“You might buy data from Bloomberg, but that’s actually S&P’s data,” Amjad noted. “Then, three months later, you get a call saying you owe licensing fees for it.”
Without real-time monitoring and reporting, firms risk falling into costly compliance traps.
The future of reference data management: From defense to offense
The message from the webinar was clear: reference data doesn’t have to be a passive, out-of-control expense. “If you’re still relying on invoices to manage reference data, you’re playing defense,” Trip concluded. “Proactive firms are the ones winning the game.”
At a time when reference data costs are rising faster than ever, firms that continue to rely on outdated, reactive approaches will find themselves at a disadvantage. Those that embrace a more strategic, technology-driven model will not only protect their bottom line but also position themselves for a more efficient, cost-effective future.
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