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TraditionDATA named Best Market Data Newcomer at Inside Market Data Awards 2019

TraditionDATA has been named ‘Best Market Data Newcomer’ at the Inside Market Data Awards, which took place on 21st May in New York.

Hosted by Inside Market Data and Inside Reference Data, these awards recognize industry excellence within market data, reference data and enterprise data management.

TraditionDATA was set up following a comprehensive re-structuring of Tradition’s market data business. The new executive team, led by Scott Fitzpatrick, re-branded and relaunched the business, transformed its pricing model and added new product packages, making it easier for clients to consume data.

Its new modular data consumption model offers flexible data packages tailored to individual requirements, ensuring clients only pay for the specific data they need. This is in direct contrast to the majority of data vendors, and avoids the complex process of unbundling, analysing and extracting valuable data points.

Scott Fitzpatrick, Head of TraditionDATA, comments: “It’s great to receive recognition for the work we have done to revamp Tradition’s market data offering. We have worked hard over the last 12 months on building out our global team, modifying our approach to pricing and packaging of data products, modernizing the relationships we have with data vendors, developing our direct-to-market technology and adding new and improved data to our product offerings.

“Looking ahead, we have a clear strategy and I’m fully committed to further enhancing our brand and providing our clients with high quality data.”

Market data fees back in spotlight

The lack of transparency and rising cost of market data is a concern continually raised by participants across FX, equities, fixed income and derivatives markets.

The issue was brought to the fore again with two major hedge fund trade groups, the Managed Funds Association and the Alternative Investment Management Association, asking the U.S. Securities and Exchange Commission (SEC) to carry out a full review of market data costs and to require exchanges to be more transparent about the fees they charge.

We take a closer look at the industry’s concerns, the transparency of market data packages, their associated fees, what regulators are doing to tackle the issue and where we go from here.

Industry’s concerns

The two hedge fund trade groups are concerned that institutional investors continue to experience significant increases in market data fees, new fee categories and unbundling. They believe this restricts trade and harms competition.

“Our members have likened the practice to ordering a hamburger which used to cost $20, but now costs $7 for the bun, $15 for the beef patty, $3 per fixing and $1 per condiment, for an overall total cost of $33 (with lettuce, tomatoes, pickles, ketchup and mustard),” the petition said, according to Reuters.

The hedge fund industry is not alone in raising these concerns. Back in December 2017, 24 trading institutions, including banks and asset managers, called for more transparency and requested exchanges reveal their profit margins for market data products.

Fees skyrocketing to benefit of exchanges

Over the past decade, the costs and fees associated with market data have seemingly skyrocketed. It is clear from exchanges’ results that this increase in market data fees is positively impacting on their revenues.

This CNBC article reported that market data fees have become the growth area for exchanges. Indeed, ICE gets about 44 percent of its revenue by charging for market data, and at Nasdaq it’s about 26 percent.

Cboe Global Markets reported a 51% increase in income from market data fees for Jan-June 2018 when compared to the same period in 2017. The firm cited increasing market data revenue as a contributor to its 6% year-on-year rise in net revenue.

CME reported an 18% year-on-year rise to $113.8m, primarily due to a fee increase put in place in April.

Furthermore, a report by the Healthy Markets Association found that some market participants have seen the cost for equity market data products rise from $72,150 per month to $182,775 in five years – an increase of more than 150%.

From this, it’s clear to see that prices are increasing and are an important source of income for exchanges. It remains to be seen if exchanges will act to reduce prices and increase transparency themselves or wait for regulators to get involved.

Shining a light on opaque market data packages

Market data fees remain one of the most opaque areas of trading and has been a constant bugbear for FX institutions as well those operating in other financial markets. Institutions are now realising that they are paying different amounts for the data they receive.

Dan Marcus explains: “Large institutions are negotiating better prices and cutting special deals based on how much they agree to trade on a particular venue. This means smaller institutions with lower trading volumes and less bargaining power are struggling to get value for money.”

This is against the spirit of the FX Global Code which advocates greater transparency and equality in the FX market, he adds. “Market participants simply want affordable, accurate market data that allows them to trade, is good value for money and is delivered in a fair, equal and transparent manner.”

Regulators and market participants taking action

There is now a realisation that institutions are paying vastly different amounts for the data they receive. The good news is that the industry participants are increasingly vocal about their concerns, and as a result, the distribution, cost and transparency of market data packages are now coming under scrutiny.

The SEC has responded positively to the industry’s concerns. SEC Chairman Jay Clayton has confirmed the commission would hold an industry roundtable on the issue at some point in the near future, but no date has been announced.

Back in March, the European Securities and Markets Authority said it shares concerns that have been raised over the increase in fees for market data in the region and intends to take a closer look at recent developments.

It’s positive to see regulators such as ESMA and the SEC carrying out reviews and it will be interesting to see if their research results in action which addresses the market’s concerns.

Dan Marcus believes market data doesn’t have to be opaque and expensive: “At ParFX, we deliver market data to our customers at no additional cost – everyone gets the same data, at the same frequency in parallel. We also don’t negotiate special deals – this is in direct contrast to the approach of other providers.”

We see the move towards lower market data costs as inevitable, as the current pricing structure is unsustainable. It seemingly does not provide value for money, prices out smaller participants and provides an unfair trading advantage to those with the deepest pockets.

It’s time other venues and platform providers bring themselves in line with the standards we expect in 2018 by making market data more transparent and affordable for everyone.

CLS’s aggregated FX trade data now available

CLS announced it has begun making its FX trade and volume data available via Quandl, an economic and financial data platform.

Subscribers to Quandl will now have access to CLS’s data, which will be delivered on an hourly, daily or monthly basis and aggregated by trade instrument (spot, swap and outright forward) and currency pair.

The currency settlement system, which settles 18 of the world’s most actively-traded currencies, receives an average submission of almost USD 5 trillion every day from banks, asset managers, corporations and hedge funds.

According to David Puth, CEO of CLS, this is the first time CLS has made this level of aggregate data readily available to the market. “It is a key source of trade information that will allow a broad range of users to get a clear picture of FX market activity across major currency pairs and products,” he says.

This view was backed up by Quandl’s co-founder and chief data officer Abraham Thomas, who spoke to trade publication Inside Market Data: “CLS had been aware for some time that it was sitting on a valuable data asset, but didn’t have the distribution infrastructure… or background in monetizing data. They reached out to us a few months ago when they became aware of our data marketplace… especially because our audience includes a bunch of hedge funds and asset managers.”

CLS has historically made aggregated and anonymized data available to the market, but the data made available through Quandl is available in a format more conducive to analysis and with greater frequency.

Customers interested in the data is expected to include large financial institutions, small financial services companies, software companies, academic institutions and research organizations.

Read the news story here.