Who Wants a Cable TV Model for Market Data, Anyway?

Over the years, many frustrated with the rising cost of market data have compared evolving market data delivery mechanisms to Cable TV. At first, they loved the choice: hundreds of channels available at the click of a button, all aggregated in one place, and the ability to record and replay. Want to see more of Andrew Zimmern eating unspeakable things and loving it, or extreme wrestlers beating each other to a bloody pulp (like, until they look like something Andrew Zimmern would chow down on)? Just call your cable provider, order that Tier 3 package, and away you go.

And while times were good, that was fine. But over the past 20 years—and especially the last dozen since the Financial Crisis—that attitude has changed. Belt tightening meant that firms became more critical about what they were paying for, and demanded greater transparency. What’s in that Tier 3 package? A gazillion channels I never use, just so I can get the one channel I want? And I’m paying how much for those channels I never watch? How much?! And the taxes and fees come to more than the cost of the package itself? And so it goes for data: why is real-time data bundled with this volatility measure, or that analytic of the opening or closing auction? Maybe you don’t need that, but you can’t buy it on its own. Where’s the meditation channel? I need to calm down…

In fact, cable companies have gotten such a bad reputation for inflexibility and lousy service—where what  should be a simple upgrade can leave you for hours without service, while trying to cancel services can be like trying to negotiate peace in the Middle East—that Time Warner Cable changed its name to something resembling a James Bond crime syndicate, apparently believing this more consumer-friendly than its previous reputation. So do you really still want market data to be more like cable?

Besides, now there’s a better way to get what you want, and avoid what you don’t: Streaming services—both online and through devices such as a Roku—offer a better, more customizable, cheaper (as long as you pay attention to what you’re purchasing), and more seamless option for people to subscribe to and pay for only what they want. And streaming is a far more disruptive model for the data industry to follow.

Despite its name, interdealer broker Tradition is one data provider actually breaking with tradition and unbundling data services to give customers more of what they want and less of what they don’t. Recognizing and being sympathetic to what clients want and need—in contrast to what providers may try to sell—can be a differentiating factor, officials say.

Being more discerning about what content a data “channel” attempts to offer can also be beneficial for the vendor themselves. For example, New York-based startup alternative data analytics provider Apteo recently stopped carrying commoditized, publicly available market and economic data on its platform specifically because clients tended to have and use their own preferred sources for this data already, so the vendor was duplicating market data collection—with the associated costs and drain on resources—with little or no benefit to itself or its customers. Not having to do that anymore means the vendor can focus on other areas that can differentiate itself.

And now that the commercial will and wherewithal exists—especially among those with nothing to lose and everything to gain—so does the technology to support a new generation of market data services.

San Mateo-based web services data provider Xignite recently unveiled a suite of microservices to support the delivery of channels of market and reference data, and tools to enable market data management in the cloud. Not only does deploying microservices lower the footprint and cost of providing and consuming services, it also makes it easier to package data into datasets with common attributes that are more aligned to consumers’ needs. The vendor has been working on microservices for three or four years. Simply put, microservices simply wouldn’t have been possible much before that because of the way cloud has evolved to enable this to work properly.

“Naturally, with cloud, you end up offering microservices. But cloud architectures have evolved a lot over the last decade. And 10 years ago, microservices wouldn’t have been possible,” says Xignite CEO Stephane Dubois.

Of course, it’s almost impossible to cut out the data sources and aggregators entirely—just as it’s impossible to cut out the cable TV providers who supply the internet connectivity that allows firms and individuals to access streaming services that depend on the internet. And even though cloud is displacing some traditional delivery mechanisms for market data—such as CME and Nasdaq allying with Google and AWS, respectively, or Bloomberg offering a Cloud-based delivery for its B-Pipe datafeed—that last mile of circuits may always represent a sticking point. Perhaps that’s the next area ripe for disruption? Suggestions on a postcard, please, in case my internet isn’t working.