market data fees for "professional customer"

Discussion in 'Data Sets and Feeds' started by lightrader, Aug 24, 2011.

  1. Hi, I want to understand if an active trader who trades for a living but trades only with his own money (and not with money of any other people) will be considered "professional customer" under the market data provisions and therefore will be required to pay the higher professional fees? Thanks.
  2. gmst


    No you are not professional.

    You will be considered a professional if you work for a financial institution, or you operate through a LLC/LP. If you are operating as a private individual trader, you are not a professional.

    All the above is true but there is one point that you should cross check with someone else. Let us say you worked for Goldman Sachs 5 yrs ago or AIG 3 yrs ago, but since then have not worked for any financial institution. Will you still be considered a professional ? I am not sure on this point. I will guess that there should be a time period (that if you have not worked for any financial institutions for x number of years) then you are not considered a professional. But you should check it. Ask your broker, they should be able to guide you.
  3. hen12y


    clicked your profile but cant see if you're UK based or not? If UK you are assumed to be a retail client in your current position, you can ask your broker to treat you as a prof. client if you so wish but that involves you signing some forms to say you are competent and dont need to be told every time that "the value of your investments could go up and down" every time. You are also offered less protection under Financial Services Compensation Scheme, the onus on prof clients is buyer beware, if you're going to execute something the onus is on you to make sure you're doing the right thing.

    You can basically choose which one you want to be.
  4. rmorse

    rmorse ET Sponsor

    NONPROFESSIONAL SUBSCRIBER - "A Non-professional Subscriber" is any natural person* whom a market data vendor has determined qualifies as a "Nonprofessional Subscriber" and who is not:

    (a) registered or qualified with: the Securities and Exchange Commission, the Commodities Futures Trading Commission, any state securities agency, any securities exchange or association, or any commodities or futures contract market or association, nor

    (b) engaged as an "investment advisor" as that term is defined in Section 201(11) of the Investment Advisor's Act of 1940 (whether or not registered or qualified under that Act), nor

    (c) employed by a bank or another organization that is exempt from registration under Federal and/or state securities laws to perform functions that would require him or her to be so registered or qualified if he or she were to perform such functions for an organization not so exempt.

    Any person who does meet the above criteria (a,b, & c) is considered a Professional Subscriber.

    * The definition of a natural person excludes corporations, trusts, organizations, institutions and partnership accounts.
  5. Thanks for the answers. All the market data fees issue seems to me pretty arcane as an issue that was relevant mainly to the times when such information was really exclusive and unique. However, with all the various sources of data that exist today (many of them are free and provide delayed and even real time data) why should someone be forced to pay that hefty fee to the exchange for a market data that he can get from other sources more cheaply?

    Why are the brokers not giving the choice just to have delayed data and therefore not to force the customers to pay these fees (I assume the exchanges do not charge for delayed data but only for real time data, since otherwise I should be charged a fee everytime I check a quote on google or bloomberg).

    Also, I don't understand why does someone who trades for his own account and do it through a company in which he is the sole shareholder (because of tax considerations, for example) have to pay yearly fees of about 3k just because of this "professional" definition. What's the difference if he operates as an individual or through a wholly owned entity and doing substantially the same trading operation?