Proprietary Data Feed
A proprietary data feed is a direct, low-latency market data connection sold by an individual stock exchange to subscribers, delivering real-time quotes, trades, order book depth, and auction information with significantly lower latency and greater granularity than the consolidated Securities Information Processor feed, giving subscribing firms a measurable speed and information advantage over those relying solely on the public SIP.
When an order is entered on a U.S. stock exchange, the exchange processes it through its matching engine and simultaneously disseminates data about that order to two destinations: its proprietary direct feed subscribers and the Securities Information Processor, which consolidates data across exchanges to produce the official national best bid and offer. In theory, these two streams carry the same information. In practice, the proprietary feed reaches subscribers faster — sometimes by hundreds of microseconds — and contains richer information, including full order book depth at multiple price levels, detailed order type identifiers, and auction imbalance data unavailable through the SIP.
Exchanges offer proprietary feeds under commercial subscription agreements at prices that increase with the depth and speed of data provided. A top-of-book feed shows only the best bid and offer, while full depth-of-book feeds reveal every displayed resting order at every price level, enabling subscribers to map the entire order queue. Sophisticated market participants — high-frequency trading firms, electronic market makers, and quantitative hedge funds — subscribe to multiple exchange proprietary feeds simultaneously to construct their own consolidated view of the market, which is faster and more complete than the SIP.
The latency gap between proprietary feeds and the SIP has been a central point of contention in U.S. market structure debates. Critics argue that the gap creates a two-tiered market in which well-capitalized professional traders have access to materially better information than retail investors who rely on the public SIP. When the SIP quote is stale relative to proprietary feeds, broker systems routing orders based on the SIP may send orders to venues displaying prices that have already moved, resulting in poor execution quality.
In 2020 and 2021, the SEC adopted rules requiring the SIP to include new data content — depth-of-book quotations, odd lot quotes, and auction information — and to be operated through a more competitive governance structure with multiple competing consolidators. The reforms aim to substantially narrow the information gap between the SIP and proprietary feeds, though exchanges have contested aspects of the rulemaking in federal court, delaying full implementation.