Indirect connection fees

T

terrain2233

Hi,

Just curious about the exchange fees for indirect connection via an API or Internet. Does the exchange itself provide this API and we pay the exchange "indirect connection fees" to access this API ? Or do we need to talk to a 3rd party providers, pay them, then pay the "indirect connection fees" to the exchange on top of that ?

Anyone with experience in this area can help me out ? I'm trying to understand how exchanges make money in this situation.

Thank you !
 
The exchanges charge display and non-display fees for market data. Depending on your market data provider and their relationship with the exchange and how they report an open API, would determine that cost.
 
Robert Morse said:
The exchanges charge display and non-display fees for market data. Depending on your market data provider and their relationship with the exchange and how they report an open API, would determine that cost.
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Thank you for the response. I'm somehow even more confused with your answer :( I get the display and non-display fees. However, let say i'm the market data provider who needs Indirect access. Do I get that "Indirect Access" from the stock exchanges (SIP, CTA/UTP) or I have to go out and pay another 3rd party provider for that indirect access ? If I need a 3rd party provider, is the "Indirect Access fee" paid to the exchange on top of the fees I need to pay that 3rd party provider ?
 
The exchanges do not provide these APIs themselves for indirect feeds. For the SIPs ( CTA & UTP ) they don't even offer connectivity directly, you must use ICE SFTI and/or Nasdaq ( or another provider who gets their data from those interconnects ).

I guess it's also worth noting, if you get a direct data feed, it's binary UDP multicast packets you must then parse yourself. You will need routers which support BGP and multicast routing, as well as performant enough code to prevent UDP from dropping packets. I would not recommend this for most companies.

All of the fees you see on CTA and UTP sites are paid directly to the exchanges and do not include connectivity. Those fees will stay the same regardless of where you get the data from ( the exception being direct vs indirect fee ). Connectivity costs can vary widely. From a few thousand, up to $10k+/m for more direct connections like ICE SFTI + Nasdaq.

If you can broadly describe what you're trying to accomplish, I may be able to help explain the fees that would be involved. I know it's quite confusing and overwhelming with all the different use cases and fees involved.
 
Polygon.io said:
The exchanges do not provide these APIs themselves for indirect feeds. For the SIPs ( CTA & UTP ) they don't even offer connectivity directly, you must use ICE SFTI and/or Nasdaq ( or another provider who gets their data from those interconnects ).

I guess it's also worth noting, if you get a direct data feed, it's binary UDP multicast packets you must then parse yourself. You will need routers which support BGP and multicast routing, as well as performant enough code to prevent UDP from dropping packets. I would not recommend this for most companies.

All of the fees you see on CTA and UTP sites are paid directly to the exchanges and do not include connectivity. Those fees will stay the same regardless of where you get the data from ( the exception being direct vs indirect fee ). Connectivity costs can vary widely. From a few thousand, up to $10k+/m for more direct connections like ICE SFTI + Nasdaq.

If you can broadly describe what you're trying to accomplish, I may be able to help explain the fees that would be involved. I know it's quite confusing and overwhelming with all the different use cases and fees involved.
More...

Thank you for your answer. Super helpful. I'm kinda new to the financial industry (currently working for a Canadian bank on Wall st) so just trying to understand how the fee structure works and understand the cost of data providers like you guys.

While I have you here, can I ask a few more questions.

1. Does non-display usage fee apply to you guys (data vendors) or just firms who want to do HFT or order routing v.v. ?
2. What are the leading players in the market who are providing these indirect feeds/API ? I know this might be a conflict of interest with Polygon to mention your competitors so it's okay if you don't want to answer this question. My best guess is Bloomberg and Reuters but they probably only serve big clients.

Thank you.
 
terrain2233 said:
Thank you for your answer. Super helpful. I'm kinda new to the financial industry (currently working for a Canadian bank on Wall st) so just trying to understand how the fee structure works and understand the cost of data providers like you guys.

While I have you here, can I ask a few more questions.

1. Does non-display usage fee apply to you guys (data vendors) or just firms who want to do HFT or order routing v.v. ?
2. What are the leading players in the market who are providing these indirect feeds/API ? I know this might be a conflict of interest with Polygon to mention your competitors so it's okay if you don't want to answer this question. My best guess is Bloomberg and Reuters but they probably only serve big clients.

Thank you.
More...
1: The non-display fees do not apply to us as a company because we only touch the data in an effort to further redistribute the data to our users. It also does not apply to non-professional users, however professional / enterprise customers it does apply.
2: There are quite a few providers who offer enterprise feeds. The cost will be a large factor in your search on that front. You can see a list of companies who have access to this data on ( http://www.nasdaqtrader.com/Trader.aspx?id=MarketDataVendorsList ). This is a good starting point. Polygon focuses on developer friendly APIs that make integration and consumption of the data easier. We also get our data directly from the exchanges, not 3rd party providers ( We try to offer institutional level data to both end users and tech focused companies ).
 
Polygon.io said:
1: The non-display fees do not apply to us as a company because we only touch the data in an effort to further redistribute the data to our users. It also does not apply to non-professional users, however professional / enterprise customers it does apply.
2: There are quite a few providers who offer enterprise feeds. The cost will be a large factor in your search on that front. You can see a list of companies who have access to this data on ( http://www.nasdaqtrader.com/Trader.aspx?id=MarketDataVendorsList ). This is a good starting point. Polygon focuses on developer friendly APIs that make integration and consumption of the data easier. We also get our data directly from the exchanges, not 3rd party providers ( We try to offer institutional level data to both end users and tech focused companies ).
More...

Thank you. Well the exchanges are like mafia. They charge you for "access fee" without providing that access on their own. I don't know why it is even legal to do that. But I guess that's the game we have to play in this industry.
 
Polygon.io said:
1: The non-display fees do not apply to us as a company because we only touch the data in an effort to further redistribute the data to our users. It also does not apply to non-professional users, however professional / enterprise customers it does apply.
2: There are quite a few providers who offer enterprise feeds. The cost will be a large factor in your search on that front. You can see a list of companies who have access to this data on ( http://www.nasdaqtrader.com/Trader.aspx?id=MarketDataVendorsList ). This is a good starting point. Polygon focuses on developer friendly APIs that make integration and consumption of the data easier. We also get our data directly from the exchanges, not 3rd party providers ( We try to offer institutional level data to both end users and tech focused companies ).
More...

Hi Quinton, if you don't mind I have a quick question after doing some research. Looks like IEX let everyone access and redistribute their data for free (https://iextrading.com/trading/market-data/) . However I assume there is "connectivity cost" if you want to cross-connect with their server to receive real-time trades/top of the book as you said above the cost listed on exchange's website doesn't include this connectivity cost ?

Thanks
 
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