April 25, 2019

Market Data Fees are too high; a small contribution


George Francis
Director, Market Data Services

Most broker dealers and asset managers believe market data fees are too high and are increasing at a pace not consistent with consolidation and distribution costs. This includes exchange data, index data, ratings and any data where there are not many competitive alternatives.  In October 2018, the SEC had an unprecedented two-day roundtable on Market Data and Market Access to discuss exchange data costs and transparency in the market.

Some exchange fee increases have been blocked by the SEC and discussions continue, but firms should take advantage of every potential expense savings now. They should apply the normal governance assessment of cost controls to include requirement verification, substitute services evaluation, elimination of real time usage, non-duplication of services, etc. and use all available options to save.

In addition to these cost saving methods, MISU reporting is a solution available for firms to recoup some of their growing exchange fees. It’s surprising how many firms are unaware of the potential cost savings related to Multiple Installations for Single User (MISU) reporting. 

A typical situation for most investment banks, asset managers and hedge funds is that an end-user accesses data via multiple services. In this scenario, firms are paying for the same data multiple times for each applicable user. MISU reporting, offered by select exchanges, allows the firm to recover these duplicative fees so that they only pay for the same data once per user.

Can your firm benefit from implementing MISU reporting?  Looking across the market, MISU implementation is something all firms with at least 25 internal professionals should consider as a short-term cost saving opportunity. Three of the most popular data sources - NYSE, UTP and OPRA currently offer MISU programs.

Jordan & Jordan (J&J) has recently implemented UTP MISU reporting for one multinational investment bank and financial services company resulting in monthly savings of approximately $5,500 for the firm. Larger firms can reach savings up to $20,000 per month.

The broader discussion of market data expenses will continue, and the consumer firms may benefit in the long run. But MISU savings are available today and firms should investigate this opportunity now.

Savings are dependent on quantity and use of services. If you’re uncertain about your level of usage, J&J can perform a free assessment and determine how much savings you may qualify for if you start the program.

As a NYSE and NASDAQ UTP approved audit service provider, J&J has combined technology and subject matter expertise in streamlining the various vendor reports, exchange accounts, global regions and related usage required for the creation of MISU reports.  J&J automates the data aggregation and report generation process and thus reduces the probability of any missed savings.