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04/01/2021 |

Market Data Agreements: What are they and why they matter

In this post, we will go over what Market Data Agreements, also known as Exchange Agreements, are and why they matter.

If you are a current TrendSpider customer and have been prompted to complete an exchange agreement, please click here to learn more about why.

Like all software vendors that provide access to market data, we are required by the exchanges that provide data to collect certain information about users and categorize users into two categories. These categories are: Professional and Non-Professional. This is important for two reasons:

  1. Compliance. Exchanges require TrendSpider to correctly categorize users in order to receive market data.
  2. Cost control. Exchanges charge TrendSpider more for access for Professional users than Non-Professional users.

In order to categorize users correctly, TrendSpider is required to ask a series of questions and present the end-user with a completed exchange agreement to accept or decline. These questions are:

  1. Do you use Market Data solely for your personal, non-business use?
  2. Do you receive Market Data for your business or any other entity?
  3. Are you currently registered or qualified with the SEC or the CFTC?
  4. Are you currently registered or qualified with any securities agency, any securities exchange, association or regulatory body, or any commodities or futures contract market, association or regulatory body in the United States or otherwise?
  5. Whether you are located within or outside the United States, do you perform any functions that are similar to those that require an individual to register or qualify with the SEC, the CFTC, any other securities agency or regulatory body, any securities exchange or association, or any commodities or futures contract market, association or regulatory body?
  6. Are you engaged to provide investment advice to any individual or entity?
  7. Are you engaged as an asset manager?
  8. Do you use capital of any other individual or entity in conduct of your trading?
  9. Are you engaged as an asset manager?
  10. Do you use the capital of any other individual or entity to conduct your trading?
  11. Do you conduct trading for the benefit of a corporation, partnership or any other entity?
  12. Have you entered into any agreement to share the profit of your trading activities or receive compensation for your trading activities?
  13. Are you receiving office space, and equipment or other benefits in exchange for your trading or work as a financial consultant to any person, firm or business entity?

The answers to these 13 questions result in your categorization as a Professional or Non-Professional trader. Specifically, if you answer No to the first question or Yes to any of the questions numbered 2 to 13, you are qualified as a Professional.

If you qualify as a Non-Professional, then you will be able to receive free access to market data from TrendSpider’s exchange partners. However, if you qualify as a Professional, there may be additional costs and paperwork in order to entitle your account to receive market data from the exchanges. TrendSpider may pass on a cost of up to $20 per month per Professional user for NYSE data to Professional investors, however no cost sharing is required for Non-Professionals.

TrendSpider is also required to provide monthly reports to all market data partners and exchanges to indicate who is receiving the data and whether or not they are considered professional.

If you qualify as Non-Professional, you will receive immediate access to the platform. If you qualify as professional, you will be asked to complete additional documentation before we are allowed to give you access to market data that requires entitlement control.