Non-Display Data Loophole

As Inside Market Data's Faye Kilburn reported this week, industry association the Financial Information Services Division (FISD), through its Business Issues Policy and Procedures (BIPPS) working group, has issued best-practice recommendations for non-display data usage, an effort completed only after a year and a half of stalemate because of conflicts between exchanges, data providers and data users about what non-display data policies should be.

The common themes of the BIPPS recommendations on eight specific issues around non-display data usage are clarity, transparency, consistency, flexibility and less bureaucracy. With around 250 members from 80 firms, BIPPS encompasses a large-enough segment of the industry to mean that even without deadlines for following the recommendations, or binding authority to implement them, the mere issuance of agreed principles should carry significant weight.

One point in the recommendations should receive further scrutiny, however. The BIPPS best practices include allowing different policies and procedures at different levels of timeliness of non-display data, such as real-time, delayed and end-of-day. The first two types are of more concern to market data practitioners, while the latter falls into the reference data space. For a set of practices that carries no regulatory authority, this certainly allows for a lot of variables and requires further guidance.

Since the function of non-display data is support for activities aside from trading—including creation of derived data, quantitative analysis, fund administration, portfolio management and compliance—it is possible that even real-time and delayed non-display data ends up feeding into these more reference data-oriented functions. So arriving at different standards based on the timeliness of data is probably not what the BIPPS group intends, or would want to see happen.