Market Data Needs for The New Generation of Online Trading Platforms

Fintech innovation has exploded, fueling a trading revolution. Today, new solutions to persistent trading problems are rapidly coming to the forefront. While built on robust technology, fintech platforms ultimately depend on high-quality, consistent, and fast data streams for delivering their promised impact to end-users. After all, platforms are only as good as the data they serve. 

If you are developing a fintech application or an online trading platform, here are four factors to explore before signing on the dotted line with a data content provider.

 

1. Business Requirements. “It depends” can be a frustrating response to a question, but it’s the right answer when examining data choices. The data you need depends on your use cases. 

You may think you need real-time data—the most costly form of data content—when actually, delayed data might be just as useful. Consider options data, for instance. A platform may say they need options data that can be sliced and diced in many ways, and find themselves being upsold on real-time data. Too often, fintech companies buy data they don’t need—wasting precious dollars that would be better spent covering marketing, R&D, distribution, and other operational costs.

You’re better served by a partner that looks out for your best interests—educating you on the ideal data forms of data for your specific use cases, and protecting your bottom line. 

 

2. Quality Transparency. Not all data is created equal—and some content providers offer data that, while timely, does not represent the full market. Whether you’re looking into widely traded commodities or thinly traded options, proceed with caution. Sadly, we’ve seen examples of fintech operators not being aware that their data represents just five percent of the market, and inadvertently assuming a tremendous amount of added risk in the process. Confidence—and the potential for successful execution—rises demonstrably when your data accurately reflects the full market. 

When it comes to thinly traded assets, the margin for making poor decisions based on inadequate data is even greater. Some data content providers won’t directly answer questions about data quality. Instead, they hedge their answers and direct you to their documentation, so you can figure it out on your own. Or, they will say they’re delivering the “best” bid/offer (which, on the surface, sounds fine). With our deep understanding about use cases, the data experts at QUODD know better.

Since a customer-oriented data content partner understands the importance of being transparent, they’ll actively disclose the type of data they provide—and why. 

 

3. Delivery. Real-time, delayed, TCP/IP, multicast feed, websocket, rest APIs. The variety of  delivery choices is wide and potentially confusing. Some of the more entrenched data providers have a one-size-fits-all approach, which can quickly blow through your funding. As an alternative, flexible data content providers show a willingness to match your product and budget needs—powerfully positioning your business for strategic growth. 

After deciding on your data and format, you enter the really tough round: getting the correct licensing approvals from the exchanges. While writing contracts and licenses is a daily occurrence for the exchanges, you may be new to it—and therefore at a distinct disadvantage. The end result? You could wind up paying for things you don’t need or not getting the right data for your needs. Here again, your data content provider can make a world of difference—painstakingly advising on data type and format so you can make smart decisions.

 

4. Compliance and Licensing. This is a hidden source of surprise fees and charges. It’s critical to have your compliance and licensing done correctly from the start—or you risk an audit later on. Because the exchanges have a two-year lookback period, your platform could be erroneously reporting without even knowing it. Giant back bills have led to the demise of many promising online trading platforms.

Each exchange is very specific about what you need to provide them, and the controls that should be built into your products. For instance, there are different cost structures for distribution use cases. While fintech companies excel at engineering and ideation, the exchange contracts present an entirely new set of complexity, especially for start-ups. 

Here, a trusted data content provider can be your business lifeline, carefully explaining how to correctly report to each exchange. And every time you want to add data, your partner should be able to share what you need to submit to the exchanges to get the correct approvals. This value-add service shouldn’t be underestimated—it can save a business from going dark.

 

Disruption meets collaboration

Fledgling fintech platforms need partners who can support them—carefully guiding their choices at critical points. With time and financial resources at a premium, there’s no wiggle room for mistakes that churn through cash or deliver sub-par customer experience. Once that door closes, it’s almost impossible to get a second chance. 

QUODD provides high-quality data and expert guidance so your fintech platform can innovate effectively—delivering excellence, staying compliant, and making the wisest use of your money.