Market data licensing FAQ part 1: Introduction to market data exchange licensing

October 02, 2023

The market data licensing process is complicated. To help navigate the various fee types and definitions, we created this comprehensive FAQ to help answer your questions and walk you through the licensing process.

You can access the other articles in the series via the links below or keep reading for a general introduction to exchange licensing. Feel free to connect with us if you have any further questions.

Title picture for Part 1: Introduction to market data licensing

In this edition, we share general information about exchange license fees. Read the article in full, or navigate to a relevant section via the highlighted FAQs below.

1.1 When do I need a market data license?

1.2 How does the market data licensing process work?

1.3 Do license fees vary by vendor and exchange?

1.4 Does the licensing process vary by vendor and exchange?

1.5 Do I pay the exchange directly, or do I pay the data vendor?

1.6 Is it possible to get real-time data without paying monthly license fees?

1.7 Do I need a license if I'm only buying historical (T+1) data?

1.8 Do I need a license if I only buy delayed (e.g. 15-minute delayed) data?

1.9 Should I implement a "bring-your-own-data" (BYOD) model for our users, or buy the data ourselves?

1.10 How long does the licensing process typically take?

You need a license to access real-time (live, intraday) market data if you're a professional user or if you're distributing data externally within 24 hours of receipt. You do NOT need a license to access historical (T+1) data. These rules apply regardless of which data vendor you choose.

It depends on the vendor. At Databento, we've streamlined licensing into a 3-step process:

  1. Determine your subscriber status
  2. Sign your attestation and any additional documents required by the venue
  3. Access live data

If you're a current Databento user, you can check out our streamlined licensing process here.

If your subscriber status is professional or you're redistributing data, we'll introduce you to the exchange (e.g. NASDAQ, CME, OPRA) via email so you can obtain the formal license or ILA. This is the longest step of the process and cannot be automated, as the exchange must speak with you to determine your status and corresponding fees. This can take months to complete, so we recommend getting started 3-6 months in advance.

Yes. Every exchange, venue, and data vendor has a different fee structure. These fees can be broken down into the following:

  • Monthly exchange license fee. Fees range from 32 USD to 20K+ USD per month per exchange and are vendor-agnostic (required regardless of which vendor you choose). Your subscriber status determines what fee you have to pay. Read more about subscriber statuses here.
  • Vendor processing or access fees. Databento doesn't charge processing or access fees; however, other data providers may do so. These fees are for services like customer support and monthly exchange reporting, and they're typically added on top of the monthly exchange license fee.
  • Data usage fee. Every data provider charges a usage fee of some sort. This fee helps us aggregate data, create various customizations, provide a seamless user experience, and keep our business afloat. At Databento, we offer both flat-rate pricing and usage-based pricing.

Read more about exchange license fees in Part 2 of this FAQ.

In general, you'll have to complete the three steps mentioned earlier (determine your subscriber status, sign your license agreement, access live data). This can be a very lengthy process depending on which exchange(s) and data provider(s) you choose. We recommend starting the licensing process three to six months in advance, given the multiple parties involved.

It depends on the exchange/venue. Some exchanges require you to pay them directly in addition to your data vendor, while others allow you to pay the data vendor, and the data vendor will pass the fees up to the exchange.

This is possible for US equities data through Databento's unique DBEQ offering. This dataset is a bundle of US equities proprietary feeds from NYSE Chicago, NYSE National, IEX, and MIAX Pearl Equities, which are free to license for distribution, display, and non-display applications and is ideal for web apps, brokerages, systematic trading, and cloud-based environments.

Every venue has a different cutoff between intraday and historical data (aka how much time passes before fees are usually lowered). Some define "historical" as 24 hours into the past, while others define "historical" as right after the market session ends. Databento users don't need a license to access historical data, which we define as 24 hours into the past. Other vendors may vary, as the license requirement varies depending on their product and definition of historical.

Note that there are some situations where you must have a license for historical data:

  • You plan to redistribute the data. See definitions and learn more here.
  • You're buying exotic OTC data not widely available to trading participants.
  • You're buying raw PCAPs from ICE.

Yes, exchanges require a license for any intraday or delayed data. However, some exchanges charge lower license fees for delayed data. Historical data usually doesn't require a license, but there are some common exceptions which we've listed above.

"Bring-your-own-data" or BYOD, refers to users bringing their own data (usually via API) to a third-party trading platform, analytics tool, or other product. In short, we don't recommend this due to:

  • Licensing complications: Users without an existing license may be required to obtain one from the exchange.
  • Engineering effort: It's tough to implement multiple APIs from different data vendors. We recommend having a single API key when possible.
  • User onboarding friction: It can take months before a user obtains their license, thus delaying their onboarding experience.
  • Buying data directly from a vendor is more expensive upfront, as you'll have to pay for the license to re-distribute data to your users, but it leads to faster onboarding and a seamless user experience.
  • You can choose to pass-through these fees to your users.
  • While it's more accounting work, this allows you to track your user's data usage over time.

If you're a non-professional user who isn't re-distributing data, you can sign the attestation and get access to real-time data instantly on Databento's website. In this case, Databento would serve as a vendor of record, e.g., we report your entitlements: you don't have reporting requirements, don't need a license agreement, and don't need to have a direct relationship with the exchange.

If you're a professional user or re-distributing data, we'll introduce you via email to the exchange to obtain the formal license or ILA. We recommend getting started three to six months in advance, given the multiple parties involved.

You can access the other articles in the series via the links below. Feel free to connect with us if you have any further questions.