🇺🇸United States

Overspending on proprietary feeds and connectivity far above cost to provide

2 verified sources

Definition

Industry disclosures show that exchanges charge markups of 900–1,800% over cost for depth‑of‑book data, 2,000–4,200% for physical connectivity, and 500–1,800% for logical connectivity compared with a venue’s own cost to provide comparable services.[4] These recurring charges substantially increase operating costs for trading firms, broker‑dealers, and data vendors that depend on these feeds and connections.

Key Findings

  • Financial Impact: For an active broker or trading firm purchasing multiple prop feeds and high‑performance connectivity, this can run into several million dollars per year in avoidable spend compared with cost‑reflective pricing.[4]
  • Frequency: Monthly (recurring exchange invoices for data and connectivity)
  • Root Cause: Market power and limited competition in proprietary market data and colocation services; opaque fee structures and limited cost‑based oversight allow exchanges to set high tariffs unrelated to marginal cost.[2][4]

Why This Matters

This pain point represents a significant opportunity for B2B solutions targeting Securities and Commodity Exchanges.

Affected Stakeholders

Heads of trading and execution, CIOs/CTOs of broker‑dealers and trading firms, Market data procurement and vendor management, Exchange connectivity and infrastructure teams, Buy‑side trading desks relying on vendor pass‑through costs

Deep Analysis (Premium)

Financial Impact

$1-2M annually in prop data overspend for surveillance operations. • $2-4M annually in unchallengeable overspend passed to providers. • $3-6M yearly aggregate overspend across data vendor members.

Unlock to reveal

Current Workarounds

Ad hoc benchmarking and cost-justification using scattered spreadsheets, internal cost allocation models in Excel, emailed rate cards, and manual reconciliation of invoices against complex fee schedules instead of a systematic cost-reflective pricing framework. • Cost modeling in spreadsheets to justify SIP vs. prop feed decisions. • Limiting prop feed subscriptions and using shadow IT for data reconstruction.

Unlock to reveal

Get Solutions for This Problem

Full report with actionable solutions

$99$39
  • Solutions for this specific pain
  • Solutions for all 15 industry pains
  • Where to find first clients
  • Pricing & launch costs
Get Solutions Report

Methodology & Sources

Data collected via OSINT from regulatory filings, industry audits, and verified case studies.

Evidence Sources:

Related Business Risks

Under‑licensed and under‑reported market data usage causing recurring revenue leakage

Low- to mid-single digit % of addressable market data revenue; for a large exchange with $500M+ annual data revenues, this implies several million dollars per year in lost billings.

Complex fee and licensing structures driving billing disputes and rework

Six‑figure annual internal cost for larger exchanges and major clients due to staff time on corrections, disputes, and legal review; foregone collections or write‑offs from disputed invoices can add further losses.[3][6]

Delayed collections from disputed and manually reconciled market data invoices

For a data business with tens or hundreds of millions in annual billings, even a 15–30 day extension in collection cycles represents material working capital drag, often in the multi‑million‑dollar equivalent of tied‑up cash at any time.

Innovation and trading capacity constrained by high and rigid data licensing costs

Lost incremental trading, order flow, and listing activity is not precisely quantified, but the report indicates that exchanges have maintained overall equity market revenues despite lower trading volumes by charging higher prices to fewer participants, implying foregone growth in both trading and data revenue.[3]

Regulatory challenges and rule changes tied to conflicts of interest in market data sales

Multi‑million‑dollar legal and regulatory engagement costs across major U.S. exchanges over several years, plus revenue risk from mandated changes to data infrastructure and potential fee reductions.[2][9]

Unauthorized redistribution and gray‑market use of exchange market data

For a large exchange, under‑reported and unauthorized usage can represent a low‑single‑digit percentage of total data revenue—potentially several million dollars annually that must be recouped via audits or is never billed.[6]

Request Deep Analysis

🇺🇸 Be first to access this market's intelligence