BMLL, which provides harmonized, historical data and analytics, has expanded into options as global trading volumes are expected to be another record this year.

Paul Humphrey, chief executive of BMLL, told Markets Media that this was the first time the firm expanded outside its traditional asset classes of equities, exchange-traded funds and listed futures. He said: “Options data is generated by the same exchanges that we deal with but has many of its own challenges. The options data set is enormous.”

The options data set increased at the beginning of this year when OPRA expanded its data dissemination from 48 lines to 96 lines in February this year. The Options Price Reporting Authority in the US distributes consolidated last sale and quote information from the options exchanges that have been approved by the Securities and Exchange Commission.

“This means the market faces spiralling costs and making that data usable becomes more of a chore,” added Humphrey.

The options data set will also expand as the number of US exchanges increases. In August this year Miami International Holdings launched the newest options exchange, MIAX Sapphire, an electronic exchange, which will be followed by a physical trading floor in 2025. IEX Group, which operates a US equities exchange, has also applied to the SEC to launch an options venue, which would become the nineteenth US options exchange if it is approved.

Data is also set to increase as the global trading volume of futures and options continues to rise. The FIA, the trade body for exchange-traded derivatives, has said it expects another record year in 2024, marking seven straight years of record activity.

BMLL bought five years of unconflated nanosecond data and Humphrey said granular data “doesn’t come better than that.”  Millisecond datasets are available but Humphrey explained that David Robinson, his chief technology officer, showed him the “extraordinary” amount of options trades and updates that happen between the third and ninth decimal place of a second. Humphrey said big data doesn’t typically frighten the BMLL team, but this raised their eyebrows.

“Our technology is built for historical data and we can go as big as the data warrants, so we didn’t miss a beat,” he added. “Nevertheless, when five petabytes of data land on your door, that is quite something.”

BMLL can now provide six-year historical, nanosecond unconflated OPRA options data in a cloud-based environment via BMLL Data Lab and BMLL Data Feed through Amazon’s AWS S3. The firm can also conflate products at speeds required by customers, e.g a quarter of a second, one second or five seconds, and can configure options data to match the format of a chosen real-time source. This means that if clients are backtesting historical data and find alpha, they can replicate that format in the real-time world.

“If people know they can get data in one place in a format they can use and they can understand those markets, it will give them more confidence to trade, “ added Humphrey. “We shine a light on the deep market microstructure of an exchange, and we are convinced that people trade more when they understand how that works.”

Growth

BML began by covering equities and has reached 98% of the MSCI All-Country World Index, which was critical as Humphrey said the big customers the firm is now serving as it moves into asset management needed coverage to reach 98% of the globe. BMLL’s biggest growth area in 2024 has been the buy side and systematic traders according to Humphrey.

He continued that it was really important in BMLL’s strategy that the firm stuck to its rails and made sure it had global coverage of equities in Level 3, and then used that data to build analytics. As a result, BMLL could build out Level 2,1 and trades product feeds.

“Fixed income and FX are not on the immediate horizon as we first want to complete the asset classes we are in,” Humphrey added.

Outdated systems for managing and sharing data are costing capital markets firms millions of dollars every year and leaving them exposed to operational and regulatory risks, according to a study by consultancy Coalition Greenwich with Axoni. Capital markets data has exploded in terms of both volume and types due to the growth of electronic trading, the creation of new products and strategies, and a surge in market volatility.

Audrey Costabile, senior analyst for Coalition Greenwich market structure & technology and author of Operations Data-Sharing: A Critical Time to Innovate, said in the report that some capital markets firms incur millions of dollars in expenses every year from manually reconciling data.

“Across the industry, firms must embrace innovative data tools if they are to meet changing regulatory and operational demands while also ensuring data privacy, accuracy and efficiency,” she said.

Humphrey added: “Firms don’t differentiate themselves anymore by owning this data, but by what they do with it. They just need the comfort of knowing there is a provider who can supply them with the quality they want.”