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Market Data is a Minefield.

If you've ever traded stocks, you know that market data is commoditized and pretty easy to find. You can go to Google Finance, Yahoo! Finance, or just look at the newspaper. If you want to get really crazy, you can subscribe to YCharts and do everything from backtesting to pumping data automatically into Excel. This is for end-of-day data (settles), though in some cases delayed and real-time data is available with similar ease.

Given that, you'd be forgiven for thinking things would be that easy for energy derivatives.

You'd be incorrect. With certain ticker symbols, on certain exchanges, you can see real-time prices on the web interface (aka screen). If you subscribe to a service, you might be able to see these prices on a spreadsheet.

It's a whole other can of worms, if you:

  • want to pump this data into a downstream system, even if it's just to make your P&L for the day.
  • want to see end-of-day prices on anything other than the most popular symbols.
  • want to see preliminary closes.
  • want prices from providers who do research to come up with their prices (i.e., Argus, OPIS, Platts).

Most of these things come with extra fees, strange licensing agreements, and/or prohibitions on how you can use the data.

This presents a challenge for people like us, who want to make all this easy. In fact, it took 18 months of negotiations with most of the vendors in the industry before we announced our partnership with Morningstar. As part of that partnership, we navigate the minefields of market data "gotchas," to get our customers the market data they need with the least fuss and lowest cost.

There's still a long road to go here, and much of it relies on the companies that make market data to adapt their business models for the cloud era. It'll happen, but it will take increased competition (like what we're seeing from Nasdaq NFX), increased demand from traders, and possibly regulation, before we see a massive shift.