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I would like to know how market data entitlement and permissions works at Vendor level and exchange level?

  1. if our firm receive Realtime data from Vendor or
  2. directly from exchange..

What permissions and formalities are required?

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This varies with venue.

  1. Historical vs real-time. Most venues don't care that you're accessing their historical data and have no paperwork required for such. At this time, four notable exceptions are any OTC venues (e.g. FX, fixed income), ICE futures, NYSE equities, and CME only if you're distributing historical data via API.

  • OTC venues usually have little interest in selling their data, preferring to limit access to participants.

  • ICE and NYSE are more open, but will require you to fill out paperwork.

  • CME is open but requires you to pay an exorbitant fee for historical distribution, because they see it as competition to their DataMine and Smart Stream solutions.

  1. Direct vs. vendor. If you're a (i) real-time data, and (ii) you're a professional user or distributing the data, then most venues will require you to execute paperwork with them. This requirement will usually apply whether you're receiving it directly via cross-connect or the venue's extranet, or over a vendor's internet-based feed. There are some exceptions to this:

  • A substantial number of venues have indirect access and managed user fee tiers which allow you to skip paperwork with the venue and just rely on your vendor to report you to the venue.

  • A substantial number of venues have "vendor of record" ("VoR") type arrangements which allow your vendor to report you to the venue, even if you're using a professional user or further distributing the data. These basically put the onus on the vendor to audit your use case and track device count. There's variations of this, e.g. Cboe equities, where the venue has an "enterprise" fee tier which a vendor can pay for to distribute infinitely to their users without their users requiring to execute paperwork with the venue.

  • A small number of venues don't require paperwork if you're a "semi-professional trader" that's working solo.

  • If you're receiving the data strictly over some kind of display application, you sometimes do not require to paper with the venue.

  1. Direct access infrastructure. If you're getting the data directly, you need to have colocation, proximity hosting at a PoP, connect to an extranet provider who has the feed on net, or have the data transported to you. There's paperwork associated with these, but they're usually trivial; they usually will wait on your venue rep to send them an email to confirm that you're allowed to access the data before they provision the access.

  2. Compliance. In any case that you have paperwork with the venue, they usually have monthly reporting requirements. This is usually over email or a web portal.

As others have pointed out, CTA/UTP/OPRA/NYSE/NASDAQ/CME's conditions are good places to start because many venues design their own licensing terms and policies after these or at least have many symmetries with them.

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If your firm is considered to be "professional", there are significant legal agreements involved.

Your data vendor can answer questions relating to the requirements for them to provide data to you as a professional firm. Sometimes you'll need to eneter into an agreement direct with the exchange before the data vendor will provide you data for that exchange, especially if it's a full tape feed.

If you go direct to the exchange for data (typically via dedicated data links), most exchanges usually have a complex set of legal agreements to sign and regular reporting of usage.

It's not possible to be any more specific unless you give us more detail on your firm, number of users, type of data used, external redistribution, desire to create financial instruments from the data, display or non-display usage etc.

Here are some links to a few exchange web sites regarding their fees and policies here: https://www.nyse.com/market-data/pricing-policies-contracts-guidelines

http://www.nyxdata.com/Docs/Market-Data/Contracts

https://www.cmegroup.com/market-data/licensing-market-data.html

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https://www.ctaplan.com/policy Has good information on what is required for data vendors. There are lots of rules around receiving, processing and using a data feed. CTA and UTP are the main consolidated tapes, and they both have their own rules/agreements.

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