Trading | Market data
“Fundamentally the problem lies in the fact that once you want to start to redistribute the huge amounts of raw or normalised data one has to pay to all the individual exchanges. This can be an astronomical cost…” Bob Fuller, Fixnetix
He adds, “In the absence of this the only option
is to charge the combined underlying real-time fees for all parties contributing the data. The result is that administering access to the consolidated data to only those paying for all the data is problematic and the combined cost prohibitive.” Bob Fuller, chief administration officer, Fixnetix,
significantly increased in the individual venues but, against the current model, it is difficult to see how exchanges could cut overall costs significantly.” Richard Chmiel, senior vice president of global
sales and marketing at OneMarketData, a vendor providing market data management and analytical solutions for financial institutions, concurs with Bloomberg’s Clode that the exchanges “have to be able to make money” to fund future investment. However, the former market maker adds a caveat in that a level could be reached at which exchange charges could become “too onerous” – especially exchanges that have a near monopoly. However, that begs the question at what level? Andy Allwright, head of regulatory strategy,
trading at Thomson Reuters, commenting on the exchanges’ charging tariffs for data, messaging, and transaction, says, “In our view the issue is not about the individual charges of exchanges, MTFs and trade publication services, it is about the lack of an established commercial and contractual model outside of North America for the distribution and consumption of consolidated data across all of these parties in real time.”
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a vendor of ultra-low latency trading, market data and connectivity solutions, and former CEO of Equiduct, commenting on the collapse of efforts by the COBA Project to develop a consolidated tape of record in Europe for equities says the endeavour faced difficulties. While most of the big broking houses have their own consolidated tape, for others costs of consuming a consolidated tape would be prohibitive. While the technology is available to achieve the
COBA Project’s envisaged goal, Fuller notes other challenges and a “definitional issue” as to who (retail or institutional) will be reading a consolidated tape and for what purposes. “Fundamentally the problem lies in the fact
that once you want to start to redistribute the huge amounts of raw or normalised data one has to pay to all the individual exchanges. This can be an astronomical cost for individual users and consequently this sort of information tends to be confined to algorithmic/HFT desks with an absolute requirement for it.” For now the debate about exchange tariffs and
those in relation to market data is unlikely to abate anytime soon. Both Deutsche Börse and LSEG were canvassed by this magazine for clarification on their market data charges but declined to comment. n
Best Execution | Summer 2013
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