Fenics Market Data’s secret source

The ability of capital markets practitioners to make judicious business and investment decisions is directly determined by the quality of data underpinning those decisions. Fenics Market Data’s Rich Winter discusses the benefits of sourcing data from over-the-counter (OTC) execution venues.

Why should firms buy/source non-listed securities data directly from execution venues as opposed to data aggregators and vendors? What are the benefits of them going straight to the source for their data?

Rich Winter, global head, Fenics Market Data and Kace Information Analytics: Historically, there has been a lack of clarity in the derivatives market and its pricing. However, regulatory changes initiated in the wake of the financial crisis that began in 2007–08 are now coming into view.  Notional volumes in swap execution facilities (SEFs), multilateral trading facilities (MTFs) and other regulated venues have grown in concert with the evolution of the market, as non-listed, OTC derivatives data are the only true, observable data points within these financial products. 

Fenics Market Data has gone to great lengths to invest in technology to harness these data points, which provides a competitive advantage. The benefits of a direct relationship refer to the depth of the information required for each client’s individual use-case. By utilizing an execution venue, more varieties of data become available, for example, top-of-book, depth-of-book, modeled and derived-broker.  Also, various frequencies of data delivery become viable due to a range of delivery options including FTP, FIX/API, binary protocol and cloud,  as the execution venues are able to offer many more options.

However, there are benefits and challenges related to both direct and aggregated channels, and the right delivery method will depend on the nuances of each consumer. Obviously, normalization of data by vendors is a reason people go to vendors in the first place: common APIs, common field IDs, common symbology, single agreements across multiple sources, to name a few of the benefits. Fenics Market Data has great partnerships with all of the main market data vendors, and we work together closely to give our mutual clients the experience they expect from a data aggregator. However, certain datasets, including our Regulatory Solutions offering, are only available through the original source because of the complexity and sensitivity of the data. Therefore, going to the source allows clients to access more robust datasets on the precise terms they want. 

Going direct to the source for data also ensures you get, verbatim, what is happening on those venues, and there is no risk of contagion by aggregation, averaging or indexing the data. By sourcing directly, firms are able to work with the raw data itself. This has been an area of growth in the market as data consumers become ever more sophisticated and demand access to content however they choose.

What current challenges face capital markets firms sourcing and managing non-listed securities data, and why? How is Fenics Market Data helping them?

Rich Winter: Regarding sourcing, it’s knowing what is out there and having it fit into a data program. The old gap between the depth and veracity of equities data versus that of OTC derivatives data is rapidly disintegrating. For any market participant, having a global understanding of the offerings available in the equities markets can prepare them well for their meetings with Fenics Market Data. 

Global sell-side institutions struggle in many ways when sourcing and managing data rights and access as they relate to unlisted markets. The nature of these large institutions is to react and source data when and where there is a need. However, multiple business units within these institutions, which are focused on any number of individual projects—the Fundamental Review of the Trading Book (FRTB), trade surveillance, best execution and independent price verification (IPV), for example—are often running in parallel and may not communicate among themselves, sourcing the data for use across the multiple business functions when, in fact, they all require similar data. 

As regulation continues to drive data requirements for more robust datasets, Fenics Market Data helps, first and foremost, by offering unique data services tailored to each client’s regulatory needs, while simultaneously connecting teams within these large institutions through our Regulatory Solutions data consulting business, which helps our clients consolidate their data requirements and licensing rights across multiple business use-cases, so they get the most value from the data they purchase. It can be hard to match and map data in non-listed markets, as common identifiers, such as exchange codes, are not as prevalent. Fenics Market Data mitigates this by providing International Securities Identification Numbers (ISINs) wherever they are available, as well as metadata and mapping to be able to categorize the instruments themselves, along with the lineage of each order and trade.

What recent milestones have been achieved by Fenics Market Data as a provider of non-listed securities data?

Rich Winter: Without a doubt, the most significant milestone has been the ability to provide level 2 market data—effectively, full order-book depth and trade data on a variety of the non-listed markets, across the many venues and brands the BGC Group of companies operates. This has been a complete game-changer from the provision of pricing-only or indicative-type datasets available in the market. We are confident that Fenics Market Data is leading the market in the provision of this order-book and trade data. Another milestone is the provision of our Insights Data, which supplements the order and trade data. Insights provides services such as order and trade liquidity scores, directional momentum, aggregated trade and order volumes, counts, average order size and dominance reports for a given counterparty.

What does Fenics Market Data consider its “secret sauce” and to what extent do the “specialists behind the data” provide clients with insight—and consequently—value?

Rich Winter: It is a confluence of ideologies from price transparency, price discovery and machine learning/analytics. Fenics Market Data has a unique position, achieved by harvesting the data points from its various fully electronic platforms, including Fenics GO, Fenics Direct and Fenics UST. This information sets the parameters of price transparency, buttressed with observable data from the world’s largest interdealer broker—where individual brokers are able to discover the best price available in the market—and is then filtered through in-house proprietary analytics, which provides the most robust offering in the data industry. 

We have an expert group of market practitioners, technologists, e‑commerce and data specialists who own the actual venues. No one knows the data and the market better than the team of people who live and breathe these markets and, by working with Fenics Market Data, you have access to that team and the content we surface and deliver every day.

What is Fenics Market Data currently focusing on that will help consolidate its position as one of the industry’s go-to providers of non-listed securities data? Are there any new initiatives on the horizon?

Rich Winter: We are focusing on expanding our market and venue coverage through significant investment in our technology and product groups. Also, our position as the world’s largest interdealer broker makes us unique in the number of liquidity pools and venues we operate. The group is also acquiring numerous specialist brokers and bringing them into the fold as data sources, such as the acquisition of Trident earlier this year. As a group, we incessantly look to enhance our brokerage desks, so keep an eye on Fenics Market Data in this space as there is much more to come.

 

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