reduce the level of service below the initial dollar amount for any reason. I originally signed up for CME, NYSE, AMEX, and NASDAQ. When I wanted to remove the stocks, they said they would continue to charge me the surcharge for both futures and stocks.

Questions to Ask

Will the vendor correct quotes that traders call in to report as incorrect? If so, in what time period (24 hours?) do they guarantee fixing the error?

Does the vendor guarantee their data baud rate? That is, if you paid for 38.4K baud and the only way you can get reliable transmission is to lower your receiver down to a 19.2K service, can you cancel the contract without any penalties?

If you use cable or satellite and move to an area where that service is not available, can you get a refund?

Are there any trial offers? What are all the conditions for a free trial? Will you be billed for the trial period under any circumstances?

Can you make changes to the services you want after you opened your account? Any additional fees involved? Can fees be reduced if less service is requested during the year?

Does the vendor guarantee tech support will call back within X days of the customer calling in? If not, why not?

Does the vendor offer a refund if the software crashes more than X times during the first N weeks of use?

Ask the vendor to list all surcharges and fees that you might be subject to, for any reason.

Ask the vendor to fax or mail you a copy of the contracts termination clause and have the agent circle anything pertaining to extra fees imposed for early termination.

Historical Data Quality

When it comes to historical data, quality involves completeness and accuracy. If the numbers are not accurate, how can your system tests be meaningful? As for completeness, some databases for sale had gaping holes in them. For example, one user complained that a CD of historical data had places where an entire day (nonholiday) of trades was missing from all contracts and commodities, and a replacement from the vendor set still had 22 of 42 contracts missing one or more days.

Another unrelated complaint was that one vendor offered data with 537 days missing, while a second vendor had all of those days present for the very same markets.

Questions to Ask

If you find errors in the data, will the vendor supply you with a corrected database? How soon? Agree that if you have to wait more than N weeks for the new database, you may get a refund.

If any of the original reported errors are also in the "corrected database," will you get a refund?

Other considerations

Exchange Fees

Data vendors fees for their services include costs passed on to them by the exchanges. Legally, price quotes belong to the exchanges and they charge for the service of making their data publicly accessible. In 1994, the top eight exchanges collected over $5 billion in fee revenue.

Data providers sell data to the trading community on two bases: "real-time" in which the quotes are delivered as they are received from the exchanges, and "delayed," in which the data is delayed by some arbitrary (but consistent) amount of time, typically 15 minutes. The cost for real-time data is considerably more expensive than that for delayed data: one vendor (BMI) offers all exchanges on a delayed basis for a flat $6G7month; but prices for real-time access start at $200/month. To offer "real-time" access, the data provider must also assess fees based on each exchange to which the user subscribes.

The exchanges distinguish between "professional" and "nonprofessional" traders, and price their fees accordingly. Exchange fees for equities quotes are relatively inexpensive for the nonprofessional trader: As of November 1997, they were less than $4.50 per month. Fees for options data are larger, hitting a maximum of $24 per month. Exchange fees for commodities quotes is something else altogether. First, an independent trader has to pay a fee to each exchange providing data. For example, if you want quotes from CME, CBOT, Nymex, and other New York futures exchanges, exchanges fees alone will exceed $300 per month. This is then added to your data vendors fees.

The following list shows fees at various exchanges at time of publication. Fees may have changed. Consult relevant exchanges for current values.

AM EX $ 3.25 CME 55.00

NASDAQ 4.00 NYMEX 55.00

NYSE 5.25 COMEX 55.00

OPRA 3.00 KCBT 12.50

Canadian Exchanges 6.00 MACE 7.50

CBOT 60.00 WCE 14.00

Foreign Exchange Data

Most vendors offer some sort of Foreign Exchange (FX) feed. However, the difference is that some feeds have very few contributing banks supplying information and others feeds have more. In other words, not all vendors use the same banks as their data source. To further complicate matters, FX is a nonregulated market and ticks from this market are "price indications" from banks. Believe it or not, the same bank can repeat the same price, sometimes very often. Therefore, not only is it possible that vendors may have very different FX tick volume on the same day, but a high tick number may not mean much at all.

The top three FX data vendors are considered to be Reuters, Dow Jones Markets, and Bridge.

Final Suggestions

Remember, these services want your business (i.e., your money). So, here are my suggested steps to take when seeking a data vendor.

• Ask all the questions you want, especially the questions proposed in this chapter. Make sure all fees are included (hookup, box rental, etc.).

• Write down the answers you get. Read them all back to the salesperson and verify all that was said. This will be your "attached list of conditions."

• Ask them to send you a written agreement. Write on the agreement that it is contingent on all the attached conditions that were described by the salesperson. Attach the list of conditions.

• Do not phone in your order. Make a copy of your agreement and mail in the original.

When you cancel a contract, return everything you are required to send in an insured package. Also, if you are canceling because the datafeed couldnt deliver properly, focus a video camera on the screen and keyboard to demonstrate the problem. Later, if you dont receive the refund you are entitled to, you will have evidence to support your claim.

May your data be delivered accurately and promptly.