Direct Edge Inks Distribution Deal with Interactive Data

Terry Flanagan

Direct Edge, the third-largest U.S. stock exchange operator, said that EdgeBook Depth, a product providing full depth-of-book information from Direct Edge’s EDGA and EDGX exchanges, is available through Interactive Data’s consolidated feed.

EDGA and EDGX together serve as the transaction venue for more than 11 percent of U.S. cash equities trading and comprise the top exchange destination for retail order flow from the largest discount brokerage houses.

“This is a significant distribution channel for Direct Edge and we are confident that Interactive Data’s network of clients, coupled with our very competitive pricing and unique market position, will greatly increase the visibility and adoption of our market data,” said Direct Edge Chief Operating Officer Bryan Harkins. “We are the number one exchange destination for retail order flow from discount brokerage houses and have built a diverse marketplace from a wide range of liquidity participants. I believe that our data will prove of great value to Interactive Data clients.”

Bryan Harkins, Direct Edge

Bryan Harkins, Direct Edge

Direct Edge has made a concerted push around data, which has become a pillar of exchange revenue.

“We are continuing to mature as a marketplace,” said Harkins. “In the past, we have offered data but we are now focusing on distribution. The partnership with IDC is an example. We have been successful in the trading space, and are interested in bringing innovation to data as well. Our data is extremely valuable because Direct Edge is the top destination for limit orders among providers of retail order flow.”

One innovation in data that Direct Edge has introduced is its quote attribution functionality, which include the Edge Attribution Incentive Program, designed to reward members for providing Direct Edge exchanges with valuable data and increased transparency for investors.

Starting in February 2013, EDGA and EDGX have each set aside 25% of the monthly revenue generated in connection with fees received from EdgeBook Attributed. From this revenue allotment, the exchanges provide a payment to eligible members who qualified for the Attributed Order Incentive Program based on the percentage of executed share volume from their Attributable Orders entered into the Exchange’s System.

“The attributed feed is a revenue sharing product,” Harkins said. “Just as exchanges provide rebates for providing liquidity, we are providing rebates for members who want to provide more value in the data feed. It’s taking an innovative mindset from trading and applying it to the market data space.”

The attribution functionality is available to any member who wishes to increase their transparency on the orders they send to EDGA and/or EDGX. This new functionality also enhances the Direct Edge Market Maker Program, allowing market makers to identify themselves as willing to buy and sell securities on the exchanges to facilitate making continuous two-sided markets.

The Interactive Data Consolidated Feed delivers low latency data from more than 450 sources worldwide. The sources in the Consolidated Feed cover more than 150 exchanges, 110 contributors of OTC data and include multi-asset class instrument coverage and extensive Level 2 data. The feed is used by financial institutions globally to power algorithmic and electronic trading applications.

“Direct Edge has quickly established itself as one of the major stock exchange operators in the United States,” said Glenn Wasserman, senior vice president and global head of product management for Interactive Data’s Trading Solutions business. “It is a trading venue that complements our product offering with its diverse liquidity and ability to deliver added value to our clients’ strategies.”

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