As exchange connectivity requirements continue to rise in both quantity and complexity, market data vendors have become a stronger asset to the operational success of global trading firms. Maneuvering through the labyrinth of paperwork, pricing, physical connectivity options and market data nuances is no easy feat. Partnering with a trusted market data vendor to share in the administrative and cost burdens associated with exchange connectivity quickly proves invaluable to trading firms, allowing them the freedom to focus on their core trading strategies.
The services offered by market data vendors are beneficial in numerous ways. Connectivity, market data feeds and exchange paperwork are three major categories where these benefits quickly become apparent.
Physical and Network Connectivity
Working directly with an exchange to set up physical and network connectivity is always an option for trading firms, however, there are considerable costs and questions associated with the management, processing and transport of data across the globe. Colocation or proximity hosting? 10Gb or 1Gb connections? A combination of both? Is a disaster recovery site (DR) required? What about telco? The list goes on. The options seem endless and each decision invites a substantial investment which can quickly exceed your budget.
As an alternative, market data vendors allow trading firms to leverage a shared connectivity cost model and avoid the infrastructure set-up fees and recurring connectivity fees required by each venue. Market data vendors can reduce the total cost of ownership (TCO) by removing the requirement for dedicated hardware, telco and exchange ports.
In addition to cost, the demands of physical network connectivity, reliability and resiliency can directly affect the success or failure of a trading operation. Choosing a market data vendor with a proven domain expertise is paramount to a firm’s success. Many vendors offer market data and low-latency connectivity, however not all of them will uncover the grey areas or deliver a truly transparent view into their network. Working with TNS, you can avoid ambiguity around costs and network architecture. We have the expertise, tools and technologies in place to provide your firm with a premier trading environment and smooth delivery process along the way.
Market Data Feeds
The exhaustive menu of market data feeds provided by each exchange venue is overwhelming to even the most prepared. And because no two exchanges are alike, the process of working with multiple venues rapidly increases the complexity involved.
Understanding the differences between levels of depth, conflation, normalization, shaped feeds (to name a few) can require research and extensive conversations with exchange representatives. During these conversations, knowing the right questions to ask will help uncover any unexpected fees associated with the required data. For example, exchanges may offer a discounted ‘indirect’ pricing model for data accessed through vendors instead of being directly procured by the trading participant themselves.
With connectivity to 60+ global markets, TNS is well positioned to facilitate delivery of the market data feeds you need. We’ve already done your homework for you. Let us answer your market data questions and walk you through the process of choosing the level of data granularity and distribution model to best suit your strategy.
Exchange Agreements and Reporting Requirements
And finally, contracting with each exchange and following their reporting guidelines adds yet another tier of complexity. This process is not straightforward and typically requires an extreme level of due diligence to adhere to compliance requirements.
Exchanges have different data package options and categories based on the types of firms contracting for their services. Stringent regulations around data consumption and redistribution both internally within a firm and to external clients must be followed. Firms should be prepared for frequent audits and contractual updates as well.
Select market data vendors, often referred to as Vendors of Record (VoR), have the appropriate licenses in place to redistribute data and manage the reporting duties on behalf of their clients. This capability relieves the administrative burden from your trading organization and can provide a smoother onboarding process for new market endeavors. TNS provides VoR services for all major markets in each global region and having key personnel in these exchange locations allows us to liaise with them in their own language and time zone enabling TNS to get answers faster by having boots-on-the-ground. Rely on our expert team also to help manage your exchange reporting and audit requirements, both on the firm level and user level.
In summary, today’s trading infrastructure and market data requirements are intricate. Having over 20 years working with the financial markets, TNS is a trusted partner that is fully equipped to answer your connectivity questions and provide guidance where needed with the exchanges. Whether your trading strategy is local and limited to one market, or global and inclusive of many exchange venues, we look forward to helping you focus your attention back on trading and do what you do best: make money.
Jeff Mezger is Director of Product Management at TNS with responsibility for its managed services for the financial industry. He oversees product development and strategy for market data, online and data center services.