Long gone are the days when the exchanges made the bulk of their money from trading. These days, the exchanges make the bulk of their profits from data. And my guess is that many of you have no idea how expensive data is.
Yes, you get data from your broker. But it’s probably price information, maybe volume, and some publicly available fundamental information. That is, to a retail trader, it seems like an amazing amount of free information. But to a pro, it’s actually pretty limited.
What’s more, the price information you’re getting that is supposedly real time is actually delayed. Not by a lot. But in this era where things happen in milliseconds, to think that you’re getting data through your browser or an app on your phone at that the same speed that pros who have their computers in the same data center as the exchanges is, well, unrealistic.
Which brings us to some potentially good news. Because if you want data that contains more information than what you can download from Yahoo Finance or Google Finance, or even Quandl, the price is going to be high.
For instance, I pay well into the six figures per year to get the options data that powers ODDS Online. But that’s why we are able to provide users with completely unique ways of evaluating options and stocks using indicators like Implied Borrow Rate, Fishback Option Value, Measure Don’t Model, Historical Return Histogram, etc.
The good news is, according to Reuters and several other news outlets, including S&P Global, the SEC is fed up with the exchanges milking investors via selling overpriced data.
It’s going to be very interesting to see how this plays out. Because for the exchanges – which are now for-profit companies – data is where the revenue growth is. See: ICE confident it is not over-reliant on sale of trading data (This article is behind a paywall, but I think the link hack I used will let anyone read the article… hopefully).