Realtime US Share Prices Available For Free And That’s A Really Big Deal

Philip Stone June 25, 2008

Google Finance and CNBC have agreed to pay the New York Stock Exchange up to $100,000 monthly for the right to display realtime NYSE share prices, and coupled with a similar deal earlier this month with NASDAQ this is really big news for investors relying on web, television or mobile news sources to make their financial decisions.

Before the two stock exchanges made these deals the non-professional investor had to rely on the Internet for prices delayed 15-20 minutes. The professionals, of course, pay the big bucks to have access to realtime services transmitted by such financial information providers as Thomson Reuters and Bloomberg. In the world of the financial community 15 or 20 minutes is plain history.

There’s an expression in the financial information world that best sums up the situation, “He or she who has the financial information first is all powerful, he or she who gets is second is often powerless.” And that’s the way it has been until now. Banks and financial institutions pay the professional information providers for realtime share prices as well as realtime news. Armed with that information first, the professional traders are done with their various deals before the guy-on-the-street watching prices on a Google or Yahoo even knew what was going on. But no longer.

The professional trader still has the advantage of getting realtime news much faster than it appears on the free Internet, if it ever gets there, and that sounds like a really big deal, but maybe not.

This writer for many years was the financial news products marketing manager within Europe, Africa and the Middle East for what was then just plain Reuters. And that meant having access to all the realtime news feeds — those same newsfeeds that the banks paid a fortune to receive.  And one could not help but notice that most times when a share price suddenly took off or dropped there was no news story to say why, and many times there may not have been a story at all on that movement.

Maybe a share moves because of a rumor in the market (Reuters did not directly report rumors but would rather run stories saying “Company A’s price have risen 3% because of rumors in the market…” but by then the damage was done. Sometimes it could have been a financial analyst sending advice to clients and the information providers were not in that loop immediately in order for the analyst’s clients to trade on that advice before it became publicly known. So, bottom line share prices can move real quickly and there often may be no news story to tell us why, and share movement may be all the ordinary investor has to go on.

And that’s why having realtime pricing is so important. At least the day trader, or the ordinary trader following a portfolio at home, can see instant changes in a share price and if the changes are unusual then there is at least a fighting chance to go do something before the professionals have finished doing their thing.

It is frightening sometimes to see just how fast the markets can move. During the times when the Fed was busy lowering interest rates earlier this year if the markets got news better than expected the shares would go up by 100 points or more within a minute –and vice versa if the news wasn’t so good. With swings like that how could the ordinary investor hope to compete with the professionals with their automatic trades et al while the guy at home watching CNBC could only see individual share prices that were delayed 15 or 20 minutes?

Or even take Tuesday’s trading in Yahoo. There was a blog report that Microsoft had made another approach to Yahoo. Yahoo shares were up at one point during the day by nearly 12% before falling back to end up 2.75%.  With a 15 minute delay what chance did the ordinary investor have in all that although since it was a blog report it should have been available to all at the same time, if you were told as quickly as the professionals where to find it.

That the NYSE and NASDAQ are now opening up realtime quotes in a simplified manner is a real breakthrough. When the Internet was in its infancy there were many entrepreneurs out there itching to get realtime quotes on their financial sites that would update instantly individual portfolios and really attract the investing masses to the Internet. But the exchanges were not having any of that.

In the case of Reuters, with its “Investors” service the web site had to sign a deal with Reuters to provide its various services, but if the web site wanted realtime quotes – faster than a 15 – 20 minute delay – then it had to sign another deal with the exchange itself for a such a license. It was expensive and an administrative nightmare so nearly all such sites settled for the delayed quotes -- probably what the exchanges wanted, too, since they wanted to protect their high license fees to the professional information providers.

The first crack in all this occurred in May when BATS Trading that handles about 9% of US equity trade said it would provide realtime share prices to Yahoo’s finance web site. That was followed earlier this month when NASDAQ launched its Last Sale realtime service for which Google Finance, The Wall Street Journal Digital Network, financial data provider Xignite, and CNBC signed up, and then Tuesday the NYSE launched its Realtime Stock Prices services.

The beauty of the NYSE and NASDAQ deals is that the exchanges have seen the admin light – it’s no use dealing with hundreds or thousands of individual sites, instead sell the quotes for a high set fee to the big players like Google and CNBC and just make the admin go away.

And that lack of admin was a prominent part of the NYSE statement Tuesday on its deal with CNBC and Google. “NYSE Realtime Stock Prices will provide investors with free, immediate and easily accessible information, without requiring them to complete any administrative forms or contracts. We are excited to partner with Google and CNBC, two great names in the information space, to offer this useful data to the public,” according to Ronald Jordan, executive vice president, Market Data.

Google’s take: “Access to real-time information has traditionally been limited to investors with brokerage accounts and other users via subscription fees. We are pleased to be making this information freely available to all our users.”

And at CNBC, “This service will enable any CNBC viewer or user the ability to make better investing decisions, no matter what platform  they use or where they are in the world,” said Scott  Drake, Vice President, CNBC Digital.

Officially, the NYSE program is on a four month pilot project awaiting final Securities and Exchange Commission approval, but with this horse already out of the stable there’ll be no closing the barn doors later.