As the financial data landscape becomes more and more competitive, market data vendors are ramping up their Canadian content. Bloomberg is now the first data provider to go live with a local "ticker plant" in Toronto, a data-gathering operation that consolidates pricing data from all Canadian exchanges and transmits them to investors via one electronic feed.
This means that clients including the Big Six banks will receive information about Canadian equities, options and futures faster and at a lower cost.
Vendors such as Bloomberg and Reuters take content from Canadian exchanges, send it to their ticker plants in the U.S., and then funnel it back to local feeds in Canada, all of which slowed down the delivery of the data. The only way to circumvent this round trip and shorten the delay was for a client such as a high-frequency trading firm to subscribe directly to the exchanges' own feeds, which can be costly. Bloomberg's new ticker plant will eliminate the extra trip to the U.S., making Bloomberg's data delivery time 71 per cent faster than before.
So who might actually use these products? High-frequency traders are hyper-focused on being the fastest. They require pricing information delivered with very little latency, or delay from the point of origination to its destination – typically less than a millisecond – in order to remain competitive in their ability to place trade orders.
Bloomberg's product will still be too slow for such high-speed shops, which invest huge sums of cash to set up physical data centres near the exchanges, or "co-locate," to get the data more directly.
The business models of institutional investors such as the major banks, hedge funds, and brokers, however, are not as dependent on speed.
For them, a local ticker plant is very appealing. It is not clear whether competing providers are planning to bring out similar products.
"They [the Big Six] all encouraged us to … invest in building our market data infrastructure region," Tony McManus, head of real-time market data at Bloomberg, said in an e-mailed statement.
"Fast and reliable access to all major trading venues in Canada is critical for a trading operation of our size and global reach," said Rich Weston, global head of market data at BMO Financial Group. The local feeds will "lead to great choice and flexibility in how we ingest local data into our automated systems," he added.
Bloomberg's new technology brings Canada closer to the standard in the U.S., where local ticker plants are par for the course. The move toward local low-latency data also creates more competition between vendors, and more choice for customers. The market for financial data has been in a state of flux since the 2008 crisis, as financial institutions across the board suffered losses that ate away at sales of real-time information and terminals. As markets have shifted trading to computers, however, speed is increasingly the source of a major competitive edge for these vendors.
Bloomberg has widened its share of the financial data industry in recent years. The company now captures 31.7 per cent of the market, with Reuters just behind at 29.9 per cent, according to a report from consultancy Burton Taylor.