Understanding SIP licensing. Derived data.
With this article about the financial data for the derived usage, we kick off the series of posts about various licensing use cases. In this article we will cover what is considered derived data, the cost, and how to obtain it. The main focus will be on understanding the SIPs (UTP + CTA) requirements, presented as US Equities Max in Finazon; however, we will also talk about alternative datasets.
What classifies as derived data?
There are two main criteria for derived data:
- The derived data cannot be reverse-engineered to recreate the information; and
- The derived data cannot be used to create other data that is recognized to be a reasonable facsimile for the UTP/CTA Information.
If your application does satisfy both of these requirements, this article is for you.
UTP breakdown
UTP (aka Network C) views derived data as fee liable or non fee liable based on what you do with the data.
Fee liable
When you use the individual ticker symbol prices to create processed data.
Examples include:
- AI/ML algorithms
- Binary Options
- Contracts for Difference (CFDs)
- Curves
- Spread bets
- Swaps
- Swaptions
Non-fee liable
The first case is when you use price data from multiple symbols to create an aggregated metric — for instance, index creation and portfolio valuations.
Also, whenever you only require real-time volume without price data — there is no need to pay any fee. That might be useful when used in conjunction with delayed prices. The only requirement will be to display a warning message to the users that the volumes are consolidated.
Agreement
It’s simple: if you need to pay the fees, an agreement with UTP is required; otherwise, it is not.
Cost
There are two types of fees that you will have to pay if your case of derived data usage is fee-liable.
1. Access type
$500 a month. For most use cases, data will be accessed via data providers like Finazon. Hence, this falls under Indirect Access Fees.
$2,500 a month. If your company requires direct connectivity, such as Extranet or Co-location – it will be considered a Direct Access Fee. This option is less common and is typically used by HFT hedge funds that require control over a tiny 1/1000 of a second.
2. Non-display usage
$3,500 a month. Since you will not display real-time prices, you always fall under the non-display usage category. The cost is fixed; however, you must specify during the onboarding whether you need the data to use on behalf of your company or your customers.
CTA breakdown
For accessing price data from the Consolidated Tape Association (CTA), we need to cover both Network A (NYSE-listed securities) and Network B (AMEX-listed securities).
Fee liable
Derived data is always fee liable under CTA rules despite the intended use case.
Agreement
It is compulsory to have an agreement with CTA to access real-time information.
Cost
1. Indirect access (if you’re receiving data through a third-party vendor)
Last sale trades (the most recent prices at which securities have been bought or sold):
- $750 for Network A
- $400 for Network B
Bid/Ask quotes (current prices buyers are willing to pay and sellers are asking for):
- $1,250 for Network A
- $600 for Network B
2. Direct access (if you’re receiving data directly from the CTA, e.g. via co-location)
Last sale trades:
- $1,250 for Network A
- $750 for Network B
Bid/Ask quotes:
- $1,750 for Network A
- $1,250 for Network B
Direct access is more expensive and technically challenging because it provides real-time data directly from the source with minimal delay, requiring specialized infrastructure. People choose direct access for speed and competitive advantage, while others opt for indirect access to save costs and avoid technical complexities when ultra-fast data isn’t critical.
How to access SIP to derive data?
Professional or commercial usage
If you need data for commercial purposes, the most straightforward approach is to pick a US Equities Max dataset. Finazon uses a built-in in-house licensing process that reduces the time to obtain an appropriate license and requires less bureaucracy. Here is the outline:
- Customize your dataset
- Fill out details about your company
- Wait until our team processes your answers
- Finazon puts you in contact with UTP/CTA, with most pre-filled documents
- Approval from UTP/CTA
- Finazon provides access to the data, with parameters selected at step 1
Personal usage
If you need data for a hobby project and have no intentions of commercializing it, then simply head to the US Equities Max dataset and subscribe! There is no need to wait for the UTP/CTA approval; you can instantly start using the data.
Alternative datasets to SIP
In situations where applications don’t require 100% volume and precision, there are more options.
US Equities Basic
A unique dataset developed by Finazon that contains non-licensable prices. There is no need to wait for the approval or pay additional fees – just start using the price and derive the necessary data! This dataset contains a few percent of the total trading volume in the US.
Nasdaq Basic/NLS+
Nasdaq offers a few options depending on the data type you need. The data covers roughly 50% of US trading volume. The licensing process is similar to the SIP; however, explaining your use case to Nasdaq representatives in your region requires more time.
- Customize your dataset
- Finazon puts you in touch with the Nasdaq
- You will need to elaborate on your process of deriving the data via email or call
- If you do qualify for it, you will pay a $2,000 a month fixed fee + potentially a small per-user fee
- Finazon provides access to the data, with parameters selected at step 1
Wrapping up
We hope this article clarifies that obtaining prices for derived data depends on your specific use case. Remember, you can always start with datasets that require minimal or no approvals and build your way up. If you’d like to read more about SIP’s policies, please refer to the UTP and CTA policies. Use this article for reference only, as policies may change over time. If you have any questions or need further assistance, don’t hesitate to contact us.
