Market Data Licensing Basics

Market data licensing and usage restrictions are often overlooked but critically important compliance issues in quantitative trading. This document covers basic concepts and common pitfalls.

1. Professional vs Non-Professional Users

Exchanges and data vendors typically classify users into two categories with vastly different pricing:

Type	Definition	Typical Monthly Fee (US Real-time Data)
Non-Professional	Individual investor, data used solely for personal investment decisions	$0-15/month
Professional	Managing money for others, working at a financial institution, or using data for commercial purposes	$100-500+/month

Common Pitfalls:

Registering as Non-Pro while actually managing others' money → Violation
Using Non-Pro rates under a corporate account → Violation
Displaying real-time quotes on blog/YouTube → May require Pro license

SEC Rule: If you are registered in the securities industry, manage money for others, or use data for commercial purposes, you are a Professional User.

2. Redistribution Restrictions

Almost all market data has redistribution restrictions:

Activity	Additional License Required?
Viewing real-time quotes yourself	❌ Basic subscription sufficient
Displaying to team in internal systems	⚠️ May require multi-user license
Displaying publicly on website/app	✅ Requires Display license
Providing to clients	✅ Requires Redistribution license
Storing and reselling to others	✅ Requires Vendor license

Cost Magnitude:

Display license: $500-5,000/month and up
Redistribution license: $5,000-50,000+/month
Exchanges will audit your usage

3. SIP/OPRA vs Direct Feeds

Two Sources for US Stock Data

Source	Description	Latency	Cost
SIP (Consolidated Feed)	Aggregated feed from all exchanges	~1-10ms	Lower ($50-200/month)
Direct Feed	Direct from individual exchange	~50-200μs	High ($5,000+/month/exchange)

Options Data (OPRA)

OPRA is the consolidated options data feed for US markets
Massive data volume: peaks at 1M+ messages/second
Full OPRA subscription: $2,000-10,000+/month
Many vendors offer simplified "Top of Book" versions at lower cost

4. Common Compliance Pitfalls

1. Delayed Data ≠ Unrestricted

15-minute delayed data still has usage restrictions
Cannot be used for commercial display (without license)
Cannot be stored and redistributed at scale

2. Free API ≠ Commercially Free

Free APIs like Yahoo Finance, Alpha Vantage typically prohibit commercial use
Using for commercial backtesting systems may violate terms
Recommendation: Use properly licensed paid data sources for commercial purposes

3. Historical Data Has Restrictions Too

Cannot resell purchased historical data
Cannot use to build competing products
Some data has usage time limits

4. Cross-Border Usage

Using US data in other countries may have data export compliance requirements
Using foreign market data may require specific regional licenses

5. Compliance Recommendations

Clarify Purpose: Personal learning, internal research, or commercial product?
Keep Records: Save subscription agreements and authorization emails
Regular Audits: Check if data usage exceeds license scope
Ask Vendors: When uncertain, ask the data vendor directly
Budget Buffer: Compliance costs can exceed data costs

6. Key Points by Market

Market	Regulator/Data Source	Key Considerations
US Stocks	SEC / SIP / Exchanges	Strict Pro vs Non-Pro distinction
US Options	OPRA	High data volume, full subscription expensive
US Futures	CME Group	Charged by product line
China A-shares	SSE/SZSE	Must obtain through authorized vendors
Hong Kong	HKEX	Real-time data requires separate payment
Cryptocurrency	Various exchanges	Relatively relaxed, but still has restrictions