Interactive Data Enters Direct Feed Fray

The service, dubbed DirectPlus, will go live in the second quarter of this year, initially providing NYSE Openbook and NYSE-Arca's ArcaBook, Nasdaq Level 1 and SingleBook, the ITCH 3.0 feed that combines data from Nasdaq Market Center with the former Brut and Inet ECNs, and a direct feed from the Direct Edge ECN.

Mark Hepsworth, president of Interactive Data's Real-Time Services division, says that these feeds were those demanded most by the vendor's client base, but that Interactive Data wants to expand the feeds available—possibly with direct feeds from derivatives exchanges and the Options Price Reporting Authority and new ECNs such as BATS Trading and Canada's Pure Trading, as well as international exchanges ahead of rolling out DirectPlus into Europe and Asia.

"We recognize that a certain part of the market remains focused on ultra-low latency… but that the cost of [collecting direct feeds] themselves continues to escalate,"—as does the burden of dealing with changes to exchange's feeds and protocols—Hepsworth says. "It's one thing for a firm the size of Morgan Stanley to build its own ticker plant, but quite another thing for smaller players."

The service is aimed at those smaller players who want direct feeds without the "headache" of maintenance, communications costs and capacity planning—though it has also attracted interest from some larger firms rethinking the ROI of build-versus-hosting, and some providers of order management systems for whom integrated low-latency data would make their products more compelling, Hepsworth says.

Unlike Thomson, Interactive Data will only offer a hosted model—which allows clients to locate their applications in the same New York BT Radianz data center as DirectPlus—rather than offering a client site-deployed version. However, clients will be able to augment the direct feeds by cross-connecting to other Interactive Data services located in the same center, including the vendor's PlusFeed consolidated feed of more than 450 sources, a tick-history database, fundamental and corporate actions data, and a range of value-added data calculated in its existing ticker plant.

The direct feed offering utilizes a separate, "stripped-down" version of Interactive Data's ticker plant, designed to "get data in and out as quickly as possible," by eliminating all value-added and derived calculations. The vendor also had to set up separate, direct communications links to the exchanges, provided by BT Radianz.

Chris Church, executive vice president of global sales and industry relations at BT Radianz, says the deal reflects an underlying trend that firms facing the current scale of market data will move more towards using managed, hosted services. "Milliseconds matter… and people don't want that infrastructure cost anymore," he says.