BMLL to expand coverage to Level 1 and Level 2 historical data

London-based market data and analytics vendor BMLL Technologies, which provides exchange Level 3 historical data, intends to expand its coverage to include Level 1 and Level 2 data. The firm has broadened the scope and breadth of its equities coverage across several exchanges around the world in recent months and hopes to leverage that enhanced data offering to compete against the established providers of Level 1 and Level 2 market data, such as Bloomberg and the London Stock Exchange Group (LSEG), which owns Refinitiv. 

BMLL CEO Paul Humphrey says the company’s experience with condensing Level 3 data will allow it to compete with the incumbent players. Real-time market data vendors produce Level 1 and Level 2 historical data as a byproduct of their core offerings. Sometimes this data has quality issues like gaps or missing fields, which can be frustrating for buy-side firms that use it, Humphrey says.

“There are tons of Level 1 and Level 2 buyers, and here, that market is universally supplied by the real-time providers, all the typical household names,” Humphrey says. When buyers want historical data, he says, they go to the large data providers, which sell the captured real-time feed and turn it into historical datasets.

“They cut it in a number of different ways—you can have it end-of-day, snapshots, intra-day—but essentially it’s the same quality,” Humphrey says. “When you’re building Level 1 and Level 2 from the top of the book, it’s got gaps, it’s got flaws, [and] it’s got spikes. If you’re pricing a program trade, and on January 10, you’ve got packet loss on Vodafone, and you don’t know where the price was at 10:32 in the morning, that’s a problem. Now what do you do about it? Well, if you can get through to these guys on the phone, they may have the answer or they may not.”

Humphrey says market data buyers are underserved by major data sellers, and his gambit is that those buyers and BMLL can benefit from expanding the market and the range of quality of data available. 

“I’m going onto their turf to compete with them to take a better product than is available today, and we’re taking the fight to the market,” Humphrey says.

Leveling up 

BMLL’s proposition is that by offering higher-quality Level 1 and Level 2 data than Bloomberg and LSEG, it will be able to pry clients away from the two massive incumbents and increase its own market share. However, competing with players that are orders of magnitude larger than BMLL could prove difficult due to other factors beyond data quality. 

Bloomberg and LSEG are already entrenched at their clients’ firms, particularly through their terminal offerings, Bloomberg Terminal and LSEG Workspace, both of which are used throughout the trading workflow for things like chat, analytics, and research. 

Stephen Kimsey, founder of UK-based market research firm Kimsey Consulting, says it could be difficult to replace key features that other, larger providers deploy.

“There will be other technologies you’re getting from that company,” Kimsey says. “The data is one part of the relationship, and it’s a very important part of the relationship, but I wouldn’t underestimate the importance of Bloomberg Chat. That’s something that companies like Symphony are trying to dislodge, but Bloomberg is still important to people.”

Kimsey explains that Bloomberg and LSEG are seen as one-stop shops in that way, and while firms would not buy all their data from a single company, data quality is not the primary concern for users when they decide to buy from a company like Bloomberg or LSEG. 

“If there are errors cropping up then they are more likely to crop up in something that is providing tons of data as opposed to a few ounces of data,” he says. “BMLL looks at around 70 exchanges, but that’s just a subsection of the coverage of the big incumbents. It may well be that they can focus on a smaller subset and provide a higher quality of data for that subset, but on the other hand, people don’t necessarily subscribe to Bloomberg or [Refinitiv] for that.”

Kimsey points to companies like AlgoSeek and Tick Data as examples of other newer companies in the Level 1 and Level 2 data space that offer alternatives to Bloomberg and LSEG services. This creates competition at a lower level even before BMLL would be able to go toe-to-toe with the giants.

“They’re entering a market where there are comparatively young providers as well as the aged, long-term information providers,” Kimsey says. “Just as they are a comparatively young company coming in with new technology, they’re not alone.” 

BMLL’s partner in its endeavor is cloud data platform Snowflake. The partnership started last year, following BMLL’s Series B funding round. BMLL began hosting some of its datasets on Snowflake in January, which was billed as the “first phase” of the partnership, and WatersTechnology understands that BMLL’s move into offering Level 1 and Level 2 historical datasets will be the next of these phases. 

While Kimsey agrees that building Level 1 and Level 2 data from the top of the order book can lead to errors, he says he isn’t sold on how much of a big deal general data quality is in this space. 

“I think a lot of [the concern about data quality] is marketing,” he says. “I’ve been reading that the CME timestamping can’t necessarily be relied on below certain times. There are queries about timestamping below a millisecond, I think, simply because the clocks can wander.”

He points out that the law of averages dictates that more errors will be found in larger datasets than in smaller datasets, but says he is prepared to be surprised if BMLL’s claims about higher data quality turn out to be true.  

“If they’ve come up with a process whereby they can actually iron out as many of the errors as is possible by machine, then well done,” Kimsey says. “I’m assuming that [BMLL is] making these claims on the back of some very clever stuff they’re doing on cleansing and normalizing the information.”

In a statement, an LSEG spokesperson says, “LSEG Tick History is the leading trusted source of historical data globally with a comprehensive database of historical pricing across over 500 execution venues dating back more than 25 years. Our focus on quality, breadth and accuracy has, in addition to Level 1, Level 2 Depth of Book, and Level 3 Market-by-Order and Market-by-Price data models captured at microsecond, enabled us to recently add even higher fidelity, recorded-at-source packet capture (PCAP) files for when nanosecond precision is needed.”

A spokesperson for Bloomberg declined to comment. 

As for BMLL’s aim to disrupt the market, Kimsey says it’s a case of wait-and-see. 

“Everybody’s trying to kick out the incumbents, but it is a crowded marketplace,” he says. “They’re going up against many players, [so] it’s not quite that simple.”