Opening Cross: Big Data, Small Print


The London Stock Exchange's consolidated data policy could bring benefits to end-users, though in most cases, more data and delivery mechanisms still means more fees.

Finally! A market data policy change that users seem to be on board with: The London Stock Exchange is consolidating contracts for its exchange market data and data from its FTSE index subsidiary, and end-users aren’t up in arms.

End-users’ usual hostility to any policy change is understandable after being bombarded with seemingly endless price increases for data, many of which come under the guise of providing more flexible subscription options or allowing users to choose from multiple individually-priced datasets instead of a single more expensive product—but which ultimately add up to more than the original price. Or “helpful” policies that seek to understand how firms use data, ostensibly so the exchange or vendor can better serve clients—but which in reality introduce fees determined by how much value users derive from using data in different ways. Or fees for data that was previously free of charge.

With all these, is it any wonder that data managers are a little paranoid? And yet—while one source erred on the side of caution about the potential for higher fees in future—another pointed out that in the meantime, the policy could lead to big savings in the short- to medium term. But perhaps it’s no wonder that this should come from the LSE, whose policy initiatives have generally gone down well of late—so much so that NYSE Euronext’s plans for a Global Data Agreement policy bore more than a passing resemblance to the LSE’s. And though the GDA policies were scrapped as a result of NYSE’s purchase by IntercontinentalExchange, ICE will have a lot of new data to manage as a result of the purchase.

And speaking of lots of new data, this week’s issue is packed full of initiatives to help firms navigate the new volumes, varieties and velocities of market data. For example, in-memory database provider McObject is preparing to roll out a new version of its eXtremeDB Financial Edition database with more mathematical functions, while research firm Tabb Group has set up a Data and Analytics practice to help firms leverage the latest data management and analysis applications. Network and latency monitoring provider Datacom has also been busy, rolling out an expanded version of its TradeView appliance, adding support for the protocol used by Strike Technologies, to monitor latency over Strike’s microwave network, and partnering with monitoring player Velocimetrics to monitor data quality.

And though this deal focuses on monitoring more than just raw speed, where many of these technologies first came to the fore, latency still attracts plenty of attention. Competing with Strike and others for the low-latency microwave network business between New York and Chicago is Quincy Data, which will next year add data from IntercontinentalExchange to its QED microwave network, to support arbitrage between contracts on ICE and their underlying securities.

Meanwhile, McKay Brothers, which operates the underlying microwave network used by Quincy, is updating technologies on its antennas to further reduce latency on its network, which will be around 40 percent faster than the fastest equivalent fiber cable route.

At the other end of the latency scale, EOX, the data and technology arm of commodities broker consortium OTC Global Holdings, is increasing the frequency of all its OTC datasets from a daily end-of-day file to five-minute intervals to provide more timely information to risk managers, who need to be performing risk and P&L calculations closer to the underlying trades driving their calculations.

All of which leads us back to the issue of data policies. Typically, data for these functions—which arguably add value through more efficient risk management, and ultimately greater profitability—comes at a price, ostensibly because of the increased data load on the data source’s systems, though no doubt also because firms will pay a premium for data that helps them make more money. So while there are plenty of reasons to welcome all this new data, beware the small print that may accompany it.

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