SBAI Publishes Standardised Trial Data License Agreement

Standardised Trial Data License Agreement, which addresses issues investment managers face when trialling new data sources

The Standards Board for Alternative Investments (SBAI) has published the Standardised Trial Data License Agreement, which addresses issues investment managers face when trialling new data sources, especially “alternative data” and “big data”. The SBAI is the global standard-setting body for the alternative investment industry and custodian of the Alternative Investment Standards, supported by approximately 200 alternative investment managers and institutional investors who collectively manage $3.5 trillion.

Currently, trialling new data is significantly slowed due to the negotiating process of a trial data license agreement, as there is no generally accepted agreement available in the industry. Some data vendors offer trial data license agreements, but they lack key protections for managers and do not adequately address relevant issues.

Alternative investment managers always have sought to access a wide array of data sources to inform their investment research and decisions. In recent years, the topic of “big data”, combined with artificial intelligence and machine learning, has attracted significant attention, fuelled by explosive growth in available alternative data sources, such as business and financial transactions, social media, apps, web-scraping, geo-location data, satellites and sensors.

At the same time, scrutiny of data usage has increased significantly, in particular following high-profile data breaches and cases of commercialisation of such data (e.g., Facebook/Cambridge Analytica).

Thomas Deinet, Executive Director of the SBAI said: "This Trial Data Licence Agreement template highlights a number of very important issues, including personal data protection, which has become a hot topic in light of the overhaul of data protection regulation in many jurisdictions. It also includes key protections for managers in areas such as prevention of insider trading and ‘right to use data’. It is crucial that managers and data vendors fully understand all risks when selling and using new data."

Emmett Kilduff, CEO of Eagle Alpha, whose firm initiated the Standardised Trial Data Licence Agreement in collaboration with managers and data vendors, said: "Trialling data is an important step in the on-boarding process for new data. The Standardised Trial Data Licence Agreement Template provides managers with a blueprint to use in the negotiation with vendors and speeds up the trialling process."

The publication of the Standardised Trial Data License Agreement follows the series of SBAI big data and artificial intelligence roundtables in 2017-2018 with alternative investment managers and investors in New York, Hong Kong, San Francisco and London.

As part of its important role in facilitating the development of good market practices, the SBAI will continue the exploration of this evolving topic at upcoming roundtables to help managers, investors and other market participants understand the state of innovation and implications for markets and participants.