Private data feeds might emerge as big issue in 2013


Will data feeds will emerge as a hot button regulatory issue this year in the technology landscape?

Controversy over public vs. private data feeds cropped up frequently in 2012. Hedge funds are now at a disadvantage when it comes to the consolidated tape, which has been usurped by private data feeds that hedge funds willing pay handsomely for.

Such feeds have become a competitive necessity. But what about data from exchanges that originate with other sources?

This data may not be a strict necessity, but they are certainly in demand by hedge funds with algorithmic trading operations. The issue has been heating up. Nasdaq OMX recently inked a deal to provide data generated from the U.S. Consumer Demand Index, from the Institute for Business Cycle Analysis, first to algorithmic clients via a private feed and then on a lagged basis to the public. We're seeing more of these deals to package private feeds for hedge funds and other trading clients. 

At some point, exchanges may think about packaging government data, some of which is more likely to move markets, in a way that gives their paying clients an algorithmic way to benefit from the first-peek in ways that retail investors can't. This in some ways is tailor-made for regulators. This is a tricky issue, but it would not surprise me to see it get some regulatory traction at some point.

For more:
- here's an article that notes the advantages of private data feeds
- here's a release

Related articles:
Market data feed case heats up