This is the 6th edition of our industry newsletter with musings, observations and ideas regarding the challenges and opportunities facing market data management leaders.
As exchange pricing and policies become more complex by the day ─ and as we prepare to launch opt-in AI capability into our exchange compliance technology later this year ─ we held a roundtable discussion with our global exchange licensing experts to get their thoughts on trends in the market and what firms need to do to cope with them. This read is a little longer than some of our usual fare, but we've aimed to make it worthy of your time down to the last line!
Exchange licensing has never stood still nor been simple – but lately, it’s moving faster and with less and less transparency. The rules shift quietly; in ways firms often don’t spot until it’s too late.
It’s like trying to hit a moving target in dense fog.
From subtle tweaks in policy wording and changing unit-of-count models to the creeping monetization of delayed data, firms face a constant stream of under-the-radar updates that can carry real risk. And while some changes are obvious, most are not. Miss one, and the consequences can be steep. Think audit exposure, back-billing and a compliance headache that wasn’t in the budget.
Why is exchange compliance getting harder?
Innovation in use cases for data among buyers. Monetization of data in new and different ways by vendors. Repeat. And so, the cycle goes.
Firms find new ways to use market data – new workflows, new products, new analytical models. As soon as those innovations gain traction, exchanges and vendors follow. What starts as a clever use case quickly becomes something that needs licensing.
But it’s not just usage that is driving the changes. Other forces are adding pressure.
Industry consolidation and new licensing models claiming to simplify things for data consumers are reshaping how contracts are structured. But as ever, ‘simpler’ doesn’t mean simple. What looks streamlined on paper often hides more granular requirements underneath.
At the same time, inconsistent regulation across jurisdictions means firms are navigating very different rulebooks simultaneously. And then emerging initiatives – like the EU consolidated tape – offer long-term promise, but short-term uncertainty and potentially another layer of complexity.
All of this creates more room for gaps to appear, not because firms are doing anything wrong, but because the ground keeps shifting beneath them as vendors look for new ways to package and sell exchange data.
Even the best-run teams get caught out. With so many policy and pricing changes every year, it’s no surprise. These are the eight blind spots we see most often.
1. “We haven’t changed anything.”
Firms that buy and use exchange data may be operating in much the same way for months at a time. That they haven’t changed may be true. But the exchange probably has – and that’s what matters. More importantly, ignorance is no defense against audit findings by a vendor.
Licensing rules evolve constantly. You might still be working off an old agreement, unaware that what used to be covered no longer holds true today.
2. Small updates that quietly move the goalposts.
Not all changes look significant, but that doesn’t mean they aren’t.
A renamed product. A subtle wording change. A new footnote. These small edits from the exchanges don’t come with warning lights – but they can drastically influence your obligations.
3. Plenty of alerts. Not enough insight.
The volume of updates from exchanges and consolidators isn’t the only issue, it’s what they actually tell you.
Some are precise. Others are dense, ambiguous or lack critical context. Knowing what changed is one thing; knowing what it means for your business and what to do about it is another. Exchanges base their notification approach on the regulations they must adhere to, so while sometimes seemingly opaque and scattershot, as long as they meet the required regulatory standards, they are technically doing nothing wrong.
4. Non-display licensing isn’t what it used to be.
Goodbye to the enterprise license model. Hello to strings attached.
Many exchanges now require per-instance declarations and system-level visibility. If your tracking hasn’t kept up, you may only be seeing part of the picture.
5. Delayed data is no longer a free pass.
Delayed data used to be low risk. That’s changing.
More exchanges are applying licensing terms to delayed data use. If you’re not tracking it closely, it’s hard to know when those rules start to apply.
6. Getting data via a vendor doesn’t always mean you’re licensed.
It’s a common assumption, and an easy one to get wrong. Data via a vendor doesn’t guarantee you’re licensed for all uses. Certain scenarios require a direct agreement with the exchange, and it’s not always obvious.
7. Consolidated contracts usually add complexity.
The front end might be neater, but the back end rarely is. One agreement might cover multiple exchanges or venues, but that usually comes with more detailed tracking, reporting, declarations and rules.
8. Gaps that only surface when someone starts asking questions.
It’s rarely one big mistake, just a slow drift over time. Usage evolves. Policies change. No one’s connecting the dots. The gap usually appears during an audit, a billing review or a policy update – and by then, it’s too late.
Some firms expect a few issues when it comes to exchange compliance reporting and build padding into the budget. Others simply don’t have the resources to keep up. Either way, the cost of non-compliance adds up – backdated fees, time lost resolving problems, and pressure to explain to management what went wrong.
If you don’t have the methods, tools or expertise to stay on top of change – get the help. Because by the time it shows up in an audit or invoice, the hard part isn’t fixing it. It’s explaining why it was missed.
Like this roundtable story format? Agree or disagree on the blind spots pointed out by our team? Share your reaction to the story, let us know what you think in the comments, and share with your network if you like what you see!
NOTE TO READERS:
What’s that? Check out this glossary of terms in case you weren't quite sure about some of the terms used above:
Unit of count – What to count for reporting and remuneration purposes
Netting - Multiple user IDs and instances (“max count,” “concurrent access count,” etc.) can be netted down to individual sources or to a natural user
Non-display - How this is defined varies by exchange; however, in our PEAR exchange compliance platform, we classify the following usage as non-display: algorithmic trading, operation of a trading platform, smart order routing, order pegging, risk management, quantitative analysis, fund administration, portfolio management, any use other than display
Delayed data - data delayed by an embargo period defined by the exchange (typically 10-15 minutes but can be up to 24 hours)
Historical data - Usually T+1 but can be older depending on the delay period
Real-time data - Any data utilized prior to the embargo period