Opening Cross: To Ensure Data Quality, Keep Long Leases on Short Leashes

Sell-off-and-lease-back strategies require supreme—award-winning, even—confidence in your partners.


There’s an old saying in the data world that—much like beer—you never really buy market data, you merely lease it. After all, you rarely have any of the rights that would usually come with ownership of a commodity. Instead, what you can do with data is often severely restricted, and any rights that you do obtain outside of normal usage come at a high price.

In some cases, consumers say, these restrictions are tactics by exchanges and vendors to generate additional revenues without providing any additional value, to make up for other underperforming business areas. In other cases, exchanges say they impose fees and restrictions to make up for data usage that falls outside that which they envisaged for the data—such as firms using it to generate their own analytics or pricing, rather than using it to trade on the exchange, or where demand creates a costly burden on an exchange to run a delivery infrastructure to serve a specific client type.

For example, the Moscow Exchange has begun making streaming real-time and end-of-day data available via its website for firms and individual traders who subscribe to its data but do not necessarily reciprocate by trading on the exchange. By not having to support traditional licensing and delivery mechanisms for this growing audience, the exchange will maintain the flexibility and resources to continue developing and enhancing its data products, rather than having those resources tied up providing trading-level infrastructure to non-trading clients.

Meanwhile, others are taking the leasing concept to a whole new level. Within the last week, CME Group announced a surprise deal to offload its flagship co-location center in Aurora, Illinois to datacenter operator CyrusOne and lease back the space that it occupies. The co-lo center had been the jewel in the crown of the modern-era CME: a uniquely modern facility that had in effect forced firms to move servers out of datacenters in downtown Chicago and forced network providers to build a spur onto any network connecting Chicago to other market centers. However, CME now says it isn’t in the real estate business, likening the datacenter to old floor-trading buildings.

In a similar vein, Markit last week acquired Fitch Solutionscredit default swap pricing business to strengthen its offering, while Fitch will license back the CDS pricing for use in its own analytics

Hopefully all parties have concrete contracts and service-level agreements to secure the provision of what are really critical services to their respective businesses. Because while giving up control means bidding farewell to certain costs and responsibilities—while getting a big chunk of change—it also means losing control of areas where control has distinct advantages, and now relying on someone else whose priorities may not align with yours 100 percent of the time.

Tthis approach might remind you of how some US states are selling and leasing back any asset of value, from  official vehicles to municipal buildings. And speaking of municipal assets, some data consumers are concerned about municipal bond data. Already a hard-to-price asset because muni bonds are so thinly traded, some fear this data will also become more expensive since—via the acquisitions of Interactive Data and Standard & Poor’s evaluated pricing business—Intercontinental Exchange has cornered a large part of that market.

CME’s datacenter deal may be a win-win, but it closed after the cutoff for the Acquisition of the Year category in this year’s Inside Market Data and Inside Reference Data Awards, voting for which is underway now. The period for nominations in the expanded call-for-entry categories is also now open, and if you’re used to being shortlisted in the awards, or are thinking about nominating yourself or a company you’ve worked with, please review the new criteria and categories carefully, as some have changed from former years. Nominating is easy, and voting is even easier, so let us know who your winners are at

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