Who owns the data anyway?

Yes – that age old question.  Is it the buy-side firm that puts in its order that owns the data, or is it the broker who executes the order, or the exchange on which the order is executed, or the data vendor who delivers the data to the end-user?

One thing that you notice about financial markets: if something is worth something, nobody gives it away for free.

Several thousand firms in Europe will have to publish their off-exchange traded equity prices come November.  30-50% of equity trading in Europe is already off-exchange.  Those firms have a regulatory obligation to publish that data in real-time.  If they use third parties (data vendors, exchanges, etc) to do that publishing on their behalf, their Legal/Compliance departments will want to have a contract and SLA in place to make sure that the publisher meets the regulatory requirements that are placed on the investment firm.

Taking that no lawyer that I’ve ever met likes to sign a firm’s “standard contract”, how many different contracts do you think that those investment firms will be able to come up with?  It might be time for European lawyers to consider brushing off their wigs and brushing up on IPR, copyright and consequential loss.

Some of the leading firms – investment banks and data vendors in particular – have already recognised this problem.  They’ve been working together to develop contract templates based on their years of experience of managing, buying and selling market data – contract templates that any and every investment firm could use.  Maybe not an off-the-shelf, industry-standard contract, but the Identikit modules that you need to build a sound and sensible contract.

Standards don’t just apply to information and technology – they can help with the legal, compliance and business issues that investment firms face today.