Audits of any kind can be frustrating. Unfortunately, sometimes they must be done to ensure compliance and maintain consistency in pricing for customers. Whether you’re faced with an upcoming audit or looking to implement new processes and procedures for your firm around market data, there are things you can do to ease the administrative burden and be as proactive as possible. Below are some of the tips that can make managing your data or audit a little easier.
1. Establish a Process
The first step in reducing or managing any audit is to have a process around your internal procedures. Here are some questions to ask periodically to ensure everyone working with market data is compliant:
- Do you understand the definitions and key words that your data providers are using?
- Do you have an entitlement system to track usage?
- Do you have a method to count non-display usage that is auditable and tracks usage?
- Does your system provide a report that is easy to generate and systematic which can be used as an audit trail?
These are important steps in any market data audit to show that you have processes and methods to capture and retain usage; most importantly, they also demonstrate your commitment to controlling, monitoring and reporting the applicable usage.
Next you’ll want to make sure that you or someone in your firm can speak confidently and intelligently about all of your firm’s usage of market data, if asked.
Depending on the size of your organization, an auditor may want to speak with one or two key people or multiple people who can explain and demonstrate all usage of market data. These people will need to be ready and prepared to discuss the number and types of people who are using the market data and how they are counting it. Don’t expect that the auditors are only interested in speaking with market data managers or traders; there may be people in peripheral departments such as technology, research, product management and administration who should also be prepared to speak.
3. Policies and Agreements
One easy thing to do to make sure you don’t go too far down a rabbit hole is to read and understand the policies and agreements you have with each of your data providers. If you don’t understand, ask. Start with your account manager and get clarity on the language being used.
Typically, market data relationship managers are managing multiple vendor relationships, based on type of content or geographical location. Some definitions and terms may differ from vendor to vendor, however, when policies are similar, it can reduce some of the administrative burden to find common ground.
One tip is to use the most stringent policy/agreement as the benchmark to make the control and administration consistent across the board at your firm.
And finally, do not discount the importance of staying in touch with your sales representative or account managers. They are there to help you.
Have you ever submitted your use cases to the provider for guidance in advance of implementing something a certain way? If not, you could be putting your firm in a position where your data vendor does not agree with the way you are classifying your reporting, which could lead to audits or back bills. Regular contact with your applicable contact will help limit issues.
If you’d like to reach someone at Nasdaq to discuss data usage and reporting, please contact us at firstname.lastname@example.org.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.