Users Eye Proposed Project Boat Fees

LONDON—European trade reporting utility Project Boat is approaching potential bank clients with "indicative" commercial terms to use its reporting service and to subscribe to feeds of trade data collected from its nine member banks, ahead of a planned November launch, sources tell DWT's sibling newsletter Inside Market Data.

Sources familiar with the situation say that the terms being proposed include an annual charge of $50,000 to use Boat's trade reporting facilities. This fee is subject to a rebate of up to 40 percent depending on the quantity and quality of data contributed, and a fee of around $200 per user per month to receive a feed of aggregated data from institutions that publish their trades via Boat. These "indicative" terms are intended to represent a starting point for negotiations, sources say.

However, officials from Boat's commercial partner, UK-based data vendor Markit, decline to comment on specific details of the pricing, and say that "the terms have not as yet been finalized."

The $50,000 annual contribution fee is designed to cover the operational costs of running the utility and to "make sure Project Boat has serious partners on board," rather than to generate profits, one source says. However, some say that the fees seem considerable given that other organizations, such as GL Trade and Chi-X, have committed to collecting and publishing data free of charge to ease compliance with the European Union's Markets in Financial Instruments Directive (Mifid).

Access to Project Boat's data at $200 a month makes it more than twice as expensive as a real-time Level 2 feed from any major European exchange, says one source. While Boat's data will be pan-European and therefore potentially offer much broader coverage than any individual exchange, others are concerned that the data will not be of a similar quality, and say that it is too early to judge whether $200 represents good value without a better understanding of the data.

"We need to qualify and quantify exactly what it encompasses. At the moment we don't know what the offering is, so we can't judge how much it would be worth," says David Berry, global head of market data at Barclays Capital in London.

Another source also expresses concern about the completeness of the data. "Do the nine banks have an obligation to publish all of their equities data to Boat?" asks this source, who says the data's value would be undermined without commitments by contributing banks to use the reporting facility extensively.

Others seem less concerned about Mifid's pre- and post-trade transparency obligations and more focused on best-execution requirements. "What we're looking for at the moment is something to give us a Mifid best-execution tool," says a third source. As yet, it is unclear how Boat will address Mifid's best-execution requirements, which also apply to non-equity instruments. This source says that the task of storing data to prove best execution across multiple asset classes is a much greater challenge than the transparency obligations that Boat intends to initially address.

Even if Project Boat succeeds in offering a real-time, pan-European datafeed, potential clients may still face symbology challenges when integrating the data into downstream applications built around specific, proprietary code systems, such as the Reuters Instrument Codes (RIC). "It's not easy to replace your feed with another. Reuters is strong because a lot of applications are RIC-based," the third source says.