Jun. 17, 2020
In regard to market data initiatives currently under consideration, please consider 1) simplifying and standardizing professional and non-professional data user definitions across all market data venues, and 2) mitigation of definition interpretation variances by providers. Currently, market data venues can establish proprietary definitions for who is considered a professional or non-professional market data user. Venues also have significant latitude on how they interpret and qualify those definitions, often basing their qualifications using resources that may not be considered reasonable or cost-effective for all redistributors. By allowing an increasing number of venues to continue create proprietary definitions or methods of determining pro/non-pro status, redistributors will continue to experience increase data operation costs and redistribution liability as managing multiple rule sets will be overly burdensome (longer, more complex forms for consumers, increased development cost for firms, etc.). It will also continue to tilt the field against firms not operating on enterprise-level contracts. Additionally, interpretation should be standardized based on concepts that are quantifiable, unlike current standards which can be rather subjective (such as social media profiles). A few simple concepts for defining professional data users that are quantifiable: Registered individuals and entities Entities, their employees and individuals using market data for commercial purposes Individuals defined by an exchange or securities rule as a professional customer As an online broker-dealer, the market dictates that we absorb the data expense for our non-professional users. Oftentimes, we must also absorb past liabilities for misidentified professionals (deliberate and not). Standardized, quantifiable definitions are necessary for firms to continue to absorb this cost and mitigate audit liability as margins continue to be compressed. Finally, as a broker-dealer operating nationally, we deal with over 50 different state and federal regulators. Each can have its own set of rules and definitions, and often those with similar rules and definitions will interpret them differently. It is a major burden for small firms to manage which stymies growth and innovation. While we’re not dealing with 50 different data venues (yet), the same concept applies to data user definitions. So as you move forward on reimagining the market data universe, please consider how to best simplify the data marketplace as it relates to this matter. Allowing more layers to an already overly complex and costly system will only work against fair competition among market participants. Regards, Tom Heffernan Vice President TradingBlock