The Financial Information Services Division of the Software and Information Industry Association (FISD) today announces the release of a white paper that frames the issues associated with the use of market data in non-display applications and for the creation of derived data products.
The FISD Business Issues Policy and Practice Standards [BIPPS] Working Group is composed of representatives from the major exchanges, data vendors and market data users. The goal of the BIPPS Working Group is to identify best practice policies among exchanges and other content providers and encourage the adoption of standard policies and practices by all exchanges and content providers. The group has been meeting for six months to discuss and refine the issues presented in this paper.
Market data is increasingly being used to create derivative data products and in applications that do not display the information. Existing exchange business models tend to be based on metrics related to the number of users or devices that can access the exchange data visually. The use of market data to create derived products and in non-display applications may not fit into existing exchange business models.
"Exchanges understandably want to ensure that they are fairly compensated for the usage of their proprietary information in these types of applications," said Tom Davin, Vice President & Managing Director of FISD. "But the distributors and consumers of market data are concerned that exchanges will adopt a variety of diverse business models to cover these types of usage, and that these models may be technically infeasible and limit users' flexibility in using the information."
During the BIPPS Working Group's discussion, it became apparent that there is no industry consensus on these issues. In the document, a section on definitions of relevant terms represents the consensus thinking of the BIPPS Working Group, while the White Paper lays out alternative points of view on various issues. The purpose of the White Paper is to describe for the industry, especially the exchanges that are grappling with these issues, the various points-of-view within the industry on this topic. It is hoped that this will result in exchange policy-making that is well-informed and to the benefit of the entire industry.
The two examples here illustrate the approach used in the paper:
ISSUE: Burden of Analysis and Interpretation
Point: Content Providers' business models should require minimal analysis and interpretation by Content Providers, Recipients, and/or Subscribers to determine how a Content Provider's policies apply to their use/application of data in other than the actual content/format it provides. For legal and competitive reasons, financial institutions are often unable to share descriptive information regarding their non-display usage of data in proprietary "black-box" applications.
CounterPoint: The Content Provider must have enough descriptive information regarding the product to apply its policies and determine whether the product is defined as derived, non-display, historic, etc.
ISSUE: Consistent and transparent policy interpretation by Content Providers
Point: Content Providers should be consistent and transparent in the judgments that they make regarding whether a particular type of data transformation creates Derived Data and any policy interpretations related to Non-display usage. Whenever a Content Provider makes a determination that a particular type of data transformation is (or is not) Derived Data or any policy interpretations related to Non-display usage, it should make this interpretation public through its website and other policy communications without divulging any proprietary information about a particular Recipient.
CounterPoint: Content Providers have confidentiality terms in their subscriber and vendor contracts that may not permit them to share all the details regarding any interpretation made regarding a particular aspect of usage that falls outside the basic contractual definition.
The BIPPS Working Group encourages all segments of the industry to review this document and provide feedback. Read the full paper:Download the document now 23.6 kb (Adobe Acrobat Document)