April 27, 2020

Market Data Post Coronavirus

Peter Tyson, Esq.
Data Licensing Manager, Jordan & Jordan
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The current state of the financial markets has been turbulent, and it is fair to say we are all just waiting for the return of normalcy. Unfortunately, recent events have emphasized the need for firms to manage costs and ensure their systems and processes are robust and resistant to disruptions. As firms begin the internal evaluation and debate on how to reduce costs, the discussion will undoubtedly turn to market data as it is a vital, complex, and expensive resource. In volatile times, the importance of market data increases with the rapid activity in the markets. In March alone, the average volume of traded shares was 15.6 billion, with a total of $14.6 trillion traded in the month. Businesses want to pay no more than required while at the same time, not expose their firms to undue reputational and financial risk. In addition to cutting market data costs, businesses still need to ensure they are keeping abreast of the changes to exchange and vendor policies and licensing models, which may provide opportunities for savings, such as where an exchange permits the netting of reportable users, or increase their costs, such as where an exchange implements a new Non-Display policy that increases fees. With market data being one of the most substantial spend items for financial firms, and with market data technology being a vital component to the efficient operation of all firms, what steps can be taken to reduce market data costs?

By now, most firms have undergone traditional market data expense management projects with strategies that focus on desk reviews, requirements verification, substitute services evaluation, elimination of real time data usage, and removal of duplicative services in order to identify all available options for saving on market data spend. Many have even taken a stab at trying to reduce their Bloomberg terminals; however, this usually is not as successful as they might have originally thought possible. 

All these methods can yield cost savings and should be explored, but as the consumption, use, and delivery of data continues to evolve, so should the approaches taken to control market data costs. This begs the question: what other options should firms be utilizing to reduce market data costs? 

MISU reporting has been around but has not always been implemented

Evaluate whether your firm can benefit from Multiple Installations for Single User (MISU) reporting. MISU reporting is a solution available for firms to recover some of their increasing exchange fees. For those not familiar with MISU reporting, most investment banks, asset managers, and hedge funds have end users that access data via multiple services, and each access to the same data is fee liable for each applicable user. MISU reporting, offered by select exchanges (NYSE, NASDAQ, and OPRA), allows the firm to recover these duplicative fees so that they only pay for the same data once per user. Larger firms can expect to possibly save between $5K to $20K per month by implementing MISU reporting. In our experience, MISU reporting is something all firms with at least 25 internal professional users should consider as a cost saving opportunity. Additionally, firms that already do MISU reporting for one exchange should ensure they are taking advantage of MISU reporting for all applicable exchanges.

Creative strategies

Effective cost reduction strategies often develop from thinking outside the box. The complexity of market data management requites more stringent contract reviews, risk assessments, and evaluations of current processes. Firms should consider whether the following endeavors could identify cost savings:

  • Reviewing market data reporting business rules to ensure (i) netting is being implemented for the exchanges that permit it, (ii) role-based exemptions are being availed, and (iii) servers and other infrastructure IDs are excluded from reporting where not fee liable.
  • Identifying and remediating potential compliance risks to reduce potential audit liability.
  • Reviewing market data application usage for over-licensing, e.g., using Level 2 data where Level 1 is sufficient, using Real-Time data where Delayed data is enough, or having products entitled but no actual usage.


Experts are not sure what the new world of capital markets will look like as the fallout from the Coronavirus continues, but all agree that FinTech will be essential moving forward. Automation is king in financial services, and it is no different for market data. Automating/semi-automating market data administrative functions, like market data reporting, facilitates processes that are more consistent, timely, and accurate. Incorporating more technology in processes that were previously done manually ensures that they are more robust and resilient in the face of unexpected events. For example, J&J’s Market Data Reporting (MDR) service is an automated solution customized per client that ensures market data reporting is done in a timely, efficient manner while eliminating key man risk and reducing manual errors and delays in reporting. Deploying technology like MDR helps attain the management of market data costs and ensures systems and processes are resistant to disruptions.

Along with reducing monthly market data costs and assisting with antifragility, employing technology may also decrease the number of long-term errors and ensure compliance with new exchange policies. Rules-based and repetitive software supported by a group of skilled workers enables firms to reduce risks and identify compliance issues before they are uncovered during an exchange audit, which may result in tens or hundreds of thousands of dollars in liability. Although recent events have limited the way businesses can interact with one another, exchanges have not stopped conducting audits. While audits may no longer be conducted in person in the upcoming months, they will continue to be conducted through file sharing and video conferencing. As exchanges adapt to conducting audits with the help of technology, firms, too, should look to technology to help limit their potential audit liability. 


As the next few months are sure to be full of uncertainty, it is more important than ever for firms to be proactive in implementing long term solutions that reduce costs and provide protection from small or large disruptive events. Automation is how firms will be able to offer the same quality, or even better quality, of business while preserving vital resources and cutting costs. Although market data consumption and administration as a whole cannot be automated, taking steps now to create semi-automated processes, like implementing rules-based software, will help businesses be more resilient to change. Of course, automation/semi-automation only works as well as the people that support it. Thus, firms need to take every opportunity now to find the right skilled practitioners to provide them with the best solutions for reducing market data costs and ensuring the antifragility of market data processes.