Partnerships—Making the Data Industry Go Around

Partnerships and alliances between exchanges have always played a significant role in the day-to-day functioning of the capital markets. This is for good reason:

• They allow vendors to extend and supplement their product offerings to the market with the view to broadening their client base, while simultaneously enhancing the value they can offer clients
• They can significantly reduce end-users’ operational complexity and streamline their internal administrative processes with respect to licenses and accessing new datafeeds
• They can massively reduce the time-to-market for data providers (vendors) compared with developing new feed handlers.

Deutsche Börse has, for a long time, been a proponent of such market data partnerships, its two most recent collaborations being with the Mexican Stock Exchange (BMV Group) and the Pakistan Stock Exchange (PSX), announced in April 2021 and December 2021, respectively.

All Deutsche Börse market data partnerships share a common foundation – a single license agreement – allowing data consumers to access additional markets simply by checking an additional box alongside the corresponding product within their existing agreements, while technical dissemination via the firm’s datafeeds is optional.

Proponent

With respect to the business benefits enjoyed on the back of the Deutsche Börse‑BMV Group partnership, Deutsche Börse’s clients are now able to access the full range of data products offered by BMV Group under a single license agreement, while the relationship has also increased BMV Group’s global distribution footprint, allowing the exchange to broaden the flow from European investments into the Mexican equities and derivatives markets. The Deutsche Börse‑PSX co‑operation mirrors that of the Deutsche Börse‑BMV Group partnership, with similar benefits accruing to the two exchanges and their respective clients.

“We continue to expand our offering of data from other global markets to meet the needs of our clients, with the BMV Group and PSX data being the most recent additions,” says Alireza Dorfard, head of Deutsche Börse Market Data + Services. “We have a proven track record of giving customers easy access to a number of European and Asian exchanges, such as BSE India [the Bombay Stock Exchange] and Taifex, and also to key datasets, such as IHS Markit’s iBoxx indexes. In this respect, the clear customer benefit and added value we provide our customers materializes in our standard licensing agreement, whereby the use-cases for the data are identical for all products.”

As a result of the two recent partnerships, Deutsche Börse’s customers have much easier access to market data from other markets, explains Martina Lochner, project manager at Deutsche Börse Market Data + Services. “We have one contract through which clients can subscribe to all of these products; and we have a standard fee model, which means clients are familiar with the fees and the ordering process as well as their reporting obligations,” she says.

“Hence, the same conditions apply to all of these products, which represents the main client benefit—they can reduce their internal administrative efforts because there is no need to negotiate separate contracts with, for example, Mexico and Pakistan.”

Amazon-like

According to Lochner, who was intimately involved in establishing the BMV Group and PSX partnerships, one of Deutsche Börse’s key clients recently likened the exchange to Amazon.com,
describing it as a marketplace for market data produced by a wide range of the industry’s exchanges. It’s an apt analogy that illustrates the intermediary role played by the exchange as a means of licensing data and delivering new market data via existing feeds to clients, thereby minimizing administrative burden, time-to-market, and opaqueness about how and what clients are buying.

When partnering with an exchange, price is always an important criterion, but is by no means the only factor clients consider when vetting potential new markets. Usually, existing price points are currency-converted when adopting the standard fee model to new alliances.

Research by WatersTechnology over the past 12 months reinforces the understanding that there are numerous criteria data consumers consider over and above pure costs. For example, clients place a premium on providers’ industry track records, in addition to their flexibility, amenability, reliability and their general reputation as a service provider and partner. It’s an area in which Deutsche Börse excels, to the extent that, according to Lochner, clients cite the safety and reliability associated with the Deutsche Börse name as an additional value-add.

“What we’ve heard from clients is that they take comfort from our place of jurisdiction being Germany and the fact that it is part of the European Union in terms of legal risk,” she explains. “It’s another client benefit, even though it is in the extreme legal corner.” 

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