How Standardized Data Documentation Helps Investors Accelerate Data Evaluation

The Financial Information Services Division (FISD) of the Software & Information Industry Association (SIIA) established the Alternative Data Council in January 2019. Ihsan Saracgil, Senior Principal Data Scientist at Visible Alpha, was a founding member of the council and has been an integral part of their most recent development: Data Descriptions Guidelines.

With the volume of data available growing exponentially, the initial evaluation of data is a shared pain point for both vendors and users. Finding alpha is not an easy task, and the goal of the Alternative Data Council is to reduce the time investors spend on tasks that do not contribute to finding an edge, freeing them up to focus on analyzing and interpreting data versus getting it into a usable state. These guidelines create a standardized approach to describing the various components of a data package, providing the technical details to assist with setup, and empowering users to save time with starter code and validation tests. Ultimately, adoption of these guidelines will streamline the process from trial agreement to research insights, benefiting data providers and data consumers.

Visible Alpha was a critical voice in the development of these guidelines. Visible Alpha provides timely, interactive access directly to sell-side models and deep consensus data for thousands of publicly-traded companies. Through the company’s methodology of normalizing analyst models to make them comparable, Visible Alpha’s taxonomy can be leveraged to map alternative data to key performance indicators for each company, enabling investors to generate alpha-producing investment ideas.

“Both alt data providers and institutional investors want to show how alternative datasets correlate to other valued datasets, especially to highlight differentiated signals relative to sell-side analyst forecasts,” Saracgil said. “How else can you tell if those signals materially differ from what the market is expecting?”

On May 17, 2022, David Murdock, CFA, Vice President of Product Management – API and Data Products at Visible Alpha, will be speaking on a virtual panel to discuss how industry cohesion around standardized documentation can provide benefits to different sectors of the alternative data ecosystem. This includes vendors, marketplaces, data engineering teams, and investment analysts and data scientists.

These guidelines are part of the FISD Alternative Data Council’s goals to lower costs for end clients, facilitate growth of the alt data industry, drive adoption of alt data, and promote the ethical use of data. Many data consumers benefit from this, including investors, fundamental analysts and portfolio managers, quantitative analysts and portfolio managers, data engineers, and more.

For more information on the FISD panel and to register, visit the event site.