Each Exchange and data Source has their own suite of unique Licence Agreements and data Policies. These Licence Agreements are a snapshot in time, and if not updated often do not reflect what clients are actually doing with the Exchange/Source data. This means usage rights can be different, and the associated terms and definitions are not standardised.
What are the problems?
There is a severe deficiency of ANY standards in the market data industry. For example: how Exchanges/Sources define Derived data, Non-display data and Application usage in different ways. Further, product sets, datasets and their components also vary from Exchange/Source to Exchange/Source.
Charging structures differ greatly according to entitlement method, depth of data provided, asset class, unique datasets, location, and by type of client. Examples include differences between Level 1, Level 2, and Full Order Book.
How market data usage AND entitlement is reported also varies from Exchange/Source to Exchange/Source, and this includes how entitlement AND usage is measured, i.e. ‘The Unit of Count’.
Most Exchanges and data Sources rely entirely upon their Vendors to collect their Fees. This places an emphasis on correct entitlement AND reporting, and an effective billing system. In addition, mistakes are typically borne by the Vendor as it is difficult to recover Fees from End User firms if they were incorrectly reported or billed to start with.
Most Exchange/Source rely upon audits to police Vendors, and this places an emphasis on good data governance, accurate control, monitoring and reporting of entitlement AND usage. Effective systems must be in place before distribution of data to avoid potentially significant financial exposure.
Good management process and understanding of the issues reduces cost of