The Nasdaq Stock Market is licensing ticker-plant software from HyperFeed Technologies to create new data products, in what could be an increasingly important business for exchanges. HyperFeed's ticker plant software will be the technology that underlies Nasdaq's Data Factory Project, a new project to give traders, issuers and consumers more data than they receive today.
The multimillion-dollar licensing deal, which spans three years, gives Nasdaq the right to use HTPX, HyperFeed's ticker-plant technology, to receive, process and distribute data from any source -- including other equity and options exchanges -- as well as mix in proprietary data.
"The idea of the Data Factory and the reason why we are picking HyperFeed is to give ourselves more flexibility in creating new products and allow us to bring those products (to market) more quickly," says Tom Davin, senior vice president, Nasdaq data products.
In the past, Nasdaq built a lot of systems in-house to disseminate its proprietary data feeds. Using HyperFeed's off-the-shelf software, "we can speed up our time to market to get new products out the door," Davin says.
Why is Nasdaq so eager to push out new data products?
In part, it's because of competition from alternative trading systems and electronic communications networks (ECNs) that are boosting transparency and openness. Last week, the Archipelago Exchange (ArcaEx) launched a market-data Web site to offer trader and issuers more real-time and historical information and analysis.
In May, Nasdaq acquired Brut ECN from SunGard Data Systems for $190 million in cash. Nasdaq could potentially combine its proprietary data with data from other sources, including internal and external, says Davin. This will ultimately provide more transparency into the trading data. "A lot of the product ideas that we've been contemplating consist of Nasdaq data, exposing data that hasn't been exposed before and combining data that hasn't been combined," Davin says.
The ticker plant has the ability to take in data and build indexes, and retransmit all of the data back out, says Paul Puschkell, president and CEO of HyperFeed.
"Nasdaq's proprietary data could be fed back to our ticker plant, and using algorithms and calculations, they can produce data sets that can be sent out," he says. In addition, Nasdaq could take advantage of other tools and services that HyperFeed provides around the ticker plant, such as data cleansing and scrubbing, an entitlement system approved by all U.S. exchanges, and different data compression methods for delivering the feed.
Nasdaq provides six proprietary data feeds, including TotalView, which contains all the market center and depth-of-book attributed (Level II) data; a second feed with Nasdaq index information; a third feed with mutual fund net-asset values; and two data feeds (quotes and trades) that cover the Nasdaq OTC Bulletin Board market. In addition, it provides four consolidated feeds under the UTP (unlisted trading privileges) Plan.
None of these feeds are impacted by the Data Factory proposal initially, and all 10 of those feeds will be offered in their stand-alone format, according to Davin. Moving forward, Nasdaq could mix that data with other external content.
"Data Factory allows us to take the content in those feeds and combine it with other content -- daily content, real time and things from external sources -- other exchanges, ECNs, what have you," says Davin.
Davin declines to say which products Nasdaq is planning to roll out or to set a timetable.
The win is a big one for Chicago-based HyperFeed, which had to compete in an extensive, year-long RFP (request for proposal) process.
Davin declined to name the technology vendors participating in the RFP. Other vendors of ticker-plant solutions include Infodyne, Wombat Financial Software, CMS Web and VhaYu.
In addition to HyperFeed's experience -- other customers include the Chicago Board Options Exchange, the Philadelphia Stock Exchange and Susquehanna International Group, an options-marketing making firm -- speed was also a factor, says Davin, who considers it one of HyperFeed's biggest selling points. HyperFeed -- formerly known as PC Quote, a data feed consolidator for the past 20 years -- in July said it could process 100,000 messages per second. Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio