Opening Cross: In Search of Data’s ‘Perfect Harmony’

Thankfully, there are efforts underway to increase levels of harmonization across different markets, though at the moment, much of this harmonization and coordination movement is being driven by exchanges that are either part of larger groups of disparate markets—which see benefits from standardizing their internal practices across their entire organizations—or that are partners with other exchanges that are either their technology supplier or customer, and where it makes sense to have similar policies to the exchange that supplies integral components of their infrastructures.

As a case in point, the Osaka Securities Exchange—part of the Japan Exchange Group, created by the merger of the OSE with the Tokyo Stock Exchange—has published its first market data document, formalizing its existing policies. While that itself isn’t a harmonization effort, officials are viewing the document as a first step towards greater integration between the two. For example, though the exchanges are not planning to merge market data policies completely yet, JPX will next year migrate OSE clients to TSE’s online client reporting and data usage and contract management platform. It doesn’t take a genius to realize that a single data platform could provide even greater potential synergies if accompanied by a single set of data policies.

Similarly, the Ukranian Exchange is changing its data policies to be more closely aligned with those of its parent, the Moscow Exchange, which itself has just announced a project to harmonize some of its own technical operations by migrating to a single facility operated by Moscow-based datacenter provider DataSpace in 2016. The Ukrainian Exchange has already aligned itself with Moscow technically, using the same FIX/FAST-format datafeeds to distribute data, and officials say the policy harmonization will make it easier for clients to manage their data subscriptions with both markets—via a single policy and single delivery infrastructure—and to make it easier for firms to ensure compliance by having one policy instead of two. The exchange even allows its parent to manage the sale and distribution of its data to global vendors on its behalf—though Ukraine retains responsibility for providing data to traders.

This apparently isn’t unique: Commodity and freight derivatives marketplace Cleartrade Exchange, which was acquired last year by the Deutsche Börse-owned European Energy Exchange, recently decided to align itself with the way EEX manages its data sales, allowing Deutsche Börse to distribute real-time data via its CEF datafeed, while EEX distributes Cleartrade’s end-of-day data, leaving Cleartrade to handle requests for raw historical data. The benefit of making Cleartrade’s data available via its larger parent is that it instantly gains a much larger distribution and makes it much easier for potential clients and distributors to access and subscribe to the data without needing a separate connection and infrastructure.

However, when market operators merge, the synergies and customer savings promised as a result of consolidating platforms and staffs often fail to materialize. So if one good thing comes out of the exchange consolidation trend, perhaps it’s that with fewer marketplaces overall—and a corresponding reduction in the number of proprietary technical details and policy and contractual terms—it will ultimately become easier for the remaining marketplaces to adopt standards without such a large throng of individual exchanges clamouring for their own self-serving policies. That is, of course, assuming that these consolidated exchange groups see the advantages of working in harmony with others for the benefit of clients, as well as just for their own benefit.