Forefront Communications

Traders: Data Debate — Speed, Quality, Fairness and Cost

Forefront Communications

Mark Dowd

Mark Dowd

Dash Financial CEO Peter Maragos and Wall Street Horizon President Bruce Fador are among the handful of executives who spoke with Traders Magazine Editor John D’Antona about some of the issues related to the cost of market data. You can read the full article here.

“Data costs what it does for basic economic reasons. Investors and trading firms need it to best position themselves to generate alpha, and brokers require it to meet their best execution obligations. Since there is no alternative it becomes a scarce resource that is in demand, thus the cost,” said Maragos.

“There is no doubt that it is the smaller firms who are hit hardest,” he added. “Reg NMS has created a situation where the exchanges have regulatory-granted pricing power on the data side, which they are using to offset — and many would say to a borderline egregious manner — the reduction they’ve seen in their trading-related revenues. More and more people are viewing this as a de facto tax on market participants and by extension their end customers, and a reckoning around this seems to be coming.”

Wall Street Horizon’s Fador added the following perspective relative to technology: “The cost of computing continues to rise, especially as vendors take on more significant big data challenges. Investors are increasingly viewing these data sets as crucial to their alpha-generation process, however, with firms such as Point72, Bridgewater and others are investing very heavily in it.”

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