Over the past two years, market participants have bemoaned the monetization of data by the largest exchanges.
CME raised the ire of the trading community last year with the increased data fees, especially at a time when many in the trading community were hurting from new regulation requirements, more technology investments to meet those demands, and a generally lousy trading environment with not a lot of movement in key markets. And there is the ongoing grumbling of traders that it is they who create the prices, not the exchange, and without them, there wouldn’t be any data to sell at all.
But an interesting thing is now happening in the data world. It is being given away for free in various new and interesting ways. True, this end-of-day data, along with various other types of data that is packaged, is not realtime. But that too may be of less importance to a growing number of traders who have discovered that the pure speed game is more or less over and the revived game of trading strategy has reemerged with the rise of more flexible and accessible trading technology.
What is emerging are platforms such as Barchart OnDemand, which puts all its historical market data on the cloud; Quandl, a free storehouse of all types of financial data; and Estimize, a free site for earnings and economic estimates – all of which are challenging the status quo of Thomson Reuters, Bloomberg and others. Meanwhile, even Trading Technologies is getting into the act, offering its customers free access to Fundamental Analytics.
These types of services are starting to garner serious notice from the industry, as well as from outsiders looking to get into these markets.
This does not mean there won’t be a need or demand for realtime data. Of course, there will be. But what it does mean is that some of the barriers to entry are now dropping to a price of well, zero. And the breadth and scope of these data sets is going to expand in the months and years to come. And with them will come new and tradable ideas.
It also is opening the door for new ideas as well. Take John Nelson of Applied Analytics – who now posts his options volatility reports on Quandl and reaches customers around the world. Leigh Drogen of Estimize said at FinTech Exchange Chicago that he plans to roll out a new stock analysis in the coming months that “will destroy stock ratings” as we know them. That’s bold.
For TT’s Mike Burns and Farley Owens, the deal to offer Fundamental Analytics reports free to customers is yet another way the ISV is trying to differentiate itself from the field. What is interesting about that is the platform’s ability to take all kinds of fundamental data and overlay it against various prices. If you want to watch crude oil prices versus oil rig counts (even by region), you can do that with just a few clicks. Shipping data is also available along with CFTC commitment of traders reports. Again, while such data is not millisecond sensitive, it provides traders with new ways to look at and backtest markets – perhaps even trade from it.
This also fits within the context of what firms such as IBM, Amazon and others are trying to do with their technology heft. Take IBM’s Kaveh Massoudian, “Big Data” Strategic Alliances Director at IBM Watson Group, which is offering free access to Watson to app developers. If a project progresses, IBM will offer to assist in developing the product and bringing it to market. Amazon is one of the sponsors of the FinTech Sandbox, another free locale to develop new ideas and leverage massive computing capabilities from firms like Amazon. When in recent memory have entrepreneurs and DIYers had such access to such technological power?
IBM’s Watson isn’t simply a number cruncher or a gimmick that won on Jeopardy. It employs what Massoudian calls cognitive computing, which generally means that the computer is able to produce any number of ranked results or probabilities. Amazon’s Scott Mullins (VIDEO) says that Amazon’s web services are more than just a bunch of servers. It too has machine learning technology behind it.
What all of this adds up to is a foundation that smart minds will adapt to and adopt. And this could essentially change the way data and technology is used in our industry.