Data, data, everywhere, and not all of it is usable.

Hedge fund managers and quant market investors utilize complex algorithms to predict trends and trades. Traditionally, the data fueling these algorithms was derived from official surveys and reports. There have been considerable recent innovations in data sources, principally scraping information from websites accessible on the Internet. As an example, Quandl, a data provider, sells information on the number of Tesla cars sold each day, broken down by each American state, that it gleans from public sources.

As the market for alternative data expands, privacy and security becomes more of a concern. Depending on the source, it can be easy for firms to find themselves on the wrong side of the law. For instance, EU privacy laws tightly govern the availability of contact information; such information is often included with other data firms are seeking, making the collection and use of information from that particular data source a potential legal violation.

This co-mingling of usable data with unusable data has led to innovations in analysis tools to separate legal from illegal data. Many of the larger firms in the space have moved away from providing raw data, instead providing analysis.

Read the full, original article, Hedge funds worry about the legal risks of using “alternative” data.

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