Wow - free real-time NYSE share prices

This set of announcements here and here from Reuters and Google could really shake up the market data industry in capital markets.

Right now, firms typically devote sizeable chunks of their budgets to buying market data including real-time price feeds. In most cases such feeds are mandatory spending because professional traders need to see what's happening in the market to both take advantage of opportunities and avoid howlers. These real-time feeds are sold by Stock Exchange for whom they represent considerable income streams.

Large brokers and banks alike have always hated these fees primarily because the stock market is the original "user supplied content" concept and hence they are providing data to the Exchanges only to repurchase an aggregated set back from them.

Unsurprisingly, the Stock Exchanges, up until now at least, have always carefully controlled what users have been able to do with those feeds, particularly around re-distribution attaching very high charges to such practices or forbidding it. This has successfully deterred most firms from making the data widely available and avoided Exchange revenues from being undermined.

It therefore takes a firm of the financial muscle and standing like Google step in and pay punitive monthly charges to the NYSE to make it universally available on the web, assuming this deal goes through. Whilst that is not a large sum for Google to absorb, I reckon they may well recoup (much of) that $100k per month simply from rendering adwords etc on the relevant pages.

From the SEC's standpoint this is a win-win. After all, it's hard for a regulator to support a scenario under which access to market data should be restricted and shouldn't instead be a free public good. Yet its another thing to actively intercede and change such a practice - far better than Google have resolved it!

This will undoubtedly hit a number of Data Vendors that redistribute NYSE real-time prices, as well as putting pressure on other exchanges to follow suit.

The google blog suggests that:

The NYSE proposal would allow you to see real-time, last-sale prices across all Google properties including Google Finance, Personalized Google, Mobile, and of course, It won't matter if you're on Wall Street or Main Street -- you'll have free, easy and fast access to real-time prices from NYSE on Google.

Depending on how such data is made available e.g. only viewable on a page or capable of being consumed as a structured feed that can be used by other applications, this could be of use to some professional investors as well as retail investors. If the former, this is likely to be of little interest since most current feeds are plumbed into trading and portfolio applications.

Another key consideration will be what important data, if any, is missing from the feed and how real "real-time" is it. I've written before about how firms will spends considerable sums to receive their data milliseconds/seconds faster since it can give them a trading edge over others - i.e. if I see a good price before you, I can grab it and make money.

Nonetheless this could be the start of an avalanche with market data vendors in its path.

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posted by John Wilson @ 11:13 AM Permanent Link newsvine reddit


At 4:04 PM, Anonymous Anonymous said...

Very interesting. But so far no announcement by Google regarding free real-time quotes..


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