SGX to roll out new market data licensing, usage tool

Singapore Exchange (SGX) and market data administration platform and service provider DataBP are partnering to roll out SGX Data Direct, an online portal for data licensing and usage reporting to streamline market data administration.

Through the online portal, data clients of SGX can securely authenticate their existing subscriptions as well as browse a catalog of products and data licenses that are available. DataBP co-founder Brandon Baker says the checkout environment operates in a similar manner to an e-commerce environment, but with additional guides around licensing rights communicated to the client.

“The goal here is to put a process in front of customers that will guide them through a licensing process that uses terminology and vocabulary that they understand, that informs them of the exchange products, the policies around different types of use, and gives them a completely online checkout experience,” Baker says.

The second piece of the rollout encompasses usage reporting so that SGX can understand how clients are utilizing the data for internal needs, as well as using data for external distribution. By deploying the DataBP tool, SGX is providing new options for client reporting. It can be done through the browser or by uploading a Microsoft Excel file in different formats including XML or fixed width, thus giving users more flexibility when it comes to formatting styles used for reporting.

The project between SGX and DataBP also includes back-office tools for automation so the exchange can collect metrics on what subscribers are doing. “Exchanges collect a lot of information and it’s important to be able to put that to use to potentially identify errors,” Baker says. “The earlier you can identify them, the better you can be at preventing billing errors or preventing compliance findings that may happen months or years down the road.”

The Australian Securities Exchange’s (ASX’s) Data Reporting Module is also powered via DataBP’s technology and was expanded in October 2020 to include firms that were reporting non-display use indirectly via data vendors. Baker says every DataBP exchange is API-enabled and that the provider recognizes that nobody wants to spend all day going between portals to do their administration.

“If there are exchange customers who will take advantage of these APIs, then they will no longer need to bounce between dozens of different portals but can instead with one single keystroke interact with all these exchanges simultaneously,” Baker says.

In a bid to better understand how customers are using market data—and to create stickier relationships—some exchanges have been developing new ways to deliver unique insights and services to users, says Tom Davin, managing director at data industry association FISD. In some instances, this has led to exchanges looking to squeeze out vendors.

“Exchanges saw a lot of value for a lot of good reasons to get closer to their customers, rather than always working through a vendor,” he says. “And a lot of the times, the vendors encouraged that and there were a lot of administration, paperwork, and compliance activities that were just more easily handled directly between the exchange and the end customer.”

Usage reporting is an important element of that. Exchanges want to understand how the buy side, a key source of liquidity, is using market data. While they understand sell-side firms better because they are members, the buy side is more opaque as they increasingly rely on sophisticated uses of technology, such as artificial intelligence (AI)-driven algorithms.

Better communication and transparency are the big themes. One market data consultant, who asked for anonymity because they work with exchanges, tells WatersTechnology that changes in policies from the exchanges don’t always get communicated from data vendors and exchanges see it as a good opportunity to get closer.

“The vendors of data, or data delivery guys, are informed of changes that the exchanges are making. Sometimes that’s passed along; sometimes it’s not. And if you look at the subscribers—how many messages do they get a day from various data providers? Policy changes can go missing; they don’t see them,” says the source.

“So they’re not as in tune with policies of the exchanges as they should be. And the big data providers have a lot on their plates and are pretty strung out. They have probably too big a load for the custom requirements they have. They’re just not going to be an expert on 100-plus major exchanges. So the exchanges have expressed to me that this is a good opportunity to get closer,” says the source.

While efficiency is top of mind with this offering, education is as well, says Baker. DataBP is working to establish processes that will help subscribers who work with a variety of exchanges be better informed about their policies.

“What we have done with SGX is provide customers with a streamlined licensing user experience that is simple and straightforward, while our rules-based licensing engine manages the complexity behind the scenes, thus providing SGX customers with the flexibility of choice without the burden,” Baker says.