KOREA CAPITAL MARKET INSTITUTE

This report researches how capital markets in the world have incorporated big data technologies into their business in order to find some implications to Korea capital markets and financial investment companies. Applying big data technologies to capital markets is expected to extend opportunities of generating new revenues, improve efficiencies of risk management and regulatory compliance, and reduce time and costs of business operation. However, from a short-term perspective, benefits from big data technologies would not be enough to cover costs of applying them to capital markets, partly because structures of capital markets and their related data are complicated so that they are not easy to be analyzed even by using advanced big data technologies. 

Nonetheless, there have been substantial and effective progresses in capital markets as Fintech firms specialized in big data technologies have emerged in capital markets. The report finds five characteristics of big data trends in global capital markets. First, big data sharing platforms to provide various sources of data relating to capital markets are enhancing market participants’ accessibilities to big data technologies. Second, applications of advanced natural language processing and machine learning have helped to understand complex structures of markets and data in more efficient ways. Third, applications of sentiment analysis to 

capital markets are improving in analyzing investors’ investment activities and understanding their phycological changes in investment decision, which has been regarded as information not easily extracted in market data or social media data due to complicated market structures and limits of data analytics. Fourth, big data technologies are promoting effectiveness of strategical algorithm analytics for capital markets, speically by saving time in testing algorithm robustness. Finally, Fintech firms specialized in providing services of risk management and regulatory compliance are mitigating regulatory burdens of financial investment companies. 

Based on these findings described above, the report suggests some implications to Korea capital markets and financial investment companies. First of all, it is important to build adequate capabilites of keeping up with changes in data environments and to establish firm-level big data strategies from a middle or long-term perspective. Moreover, incumbents in capital markets need to help stimulate emergence of Fintech start-ups specialized in big data techonologies, as global capital markets are utilizing them in saving costs and enhancing efficiencies of big data applications. Furthermore, it is desirable for them to cooperate each other in sharing big data and also building a big data sharing platform. Finally, environmental or legal issues relating big data have to be followed in a continuous and timely manner.