Application program interface, or API, is a way to connect two applications. The first application makes a request, formally known as a query, to the second application via API, then the data requested is returned. The easiest way to understand APIs is just to think of them as a connection between two different places (endpoints). APIs are used to pull stock market data, distribute content, connect banks/brokerages to applications, link credit card providers to banks, power eCommerce sites, send software updates, book travel, log into your account using Facebook/Google/LinkedIn, stream Netflix, etc. APIs are the telephone operators of the internet.
The ability to utilize different parameters makes APIs extremely useful. In other words, the request from the first application can be tailored to return specific data from the applications that it is connected to via API. For example, if you’re looking for a hotel, you can enter different search criteria on a hotel website (destination, check-in/check-out, rooms, visitors, etc.). Once you hit search, the website you are on will send the criteria or query via API to all of the hotels they are connected to. The connected hotels will send back, via the API, any listings that match your criteria.
Let’s imagine this in a stock market scenario, you may only want to see last week’s news for TSLA - you can query the Benzinga News API for just a specific date range, for a specific stock. Or, someone may want to see only news about futures and commodities, they are able to query for up to 88 different channels.
Stock Market API Definition
A Stock Market News API is a way to pull news into your platform or interface. A few use cases include a display (like you see on brokerages such as TD Ameritrade, TradeStation, and Robinhood), backtesting/analysis, and algorithmic trading. Benzinga allows for their news to be fully embedded on your platform, meaning that the whole story can be viewed without a user ever leaving your website/app. As mentioned, there are many parameters that can be applied to your query - if you’d like further information on what is possible feel free to check out Benzinga’s API Documentation.
Third Party Data APIs
The majority of brokerages, research platforms, trading communities, discords and media sites obtain their stock market news and data from third-party sources. It is far more efficient for a brokerage to focus on the user interface, user experience, execution, customer support and marketing than to spend time and resources on aggregating data and originating content. Third-party providers have large data operations, combining both automated and manual quality assurance processes to make sure that the data provided is timely and accurate. While many data providers aggregate news content from other sources, some produce their news in-house - running a successful newsdesk is difficult to manage and expensive to maintain.
API Ratings
Why do trading platforms need a Ratings API? Aside from news, one of the most popular datasets available is the Analyst Ratings API. Analysts at large banks spend the majority of their day researching companies and providing their recommendations on specific equities. Users like seeing what professional investors have to say about stocks that they are interested in and/or holding.
Analysts usually initiate (start) coverage of a stock. From there they provide a recommendation of buy, sell, hold, neutral, outperform, underperform, overweight, or underweight. Based on an analyst's most recent action, they might provide an action, such as an upgrade, downgrade, maintain, or reinstate. Analysts usually provide a 1-year price target along with their action and recommendation.
This information can be reorganized and displayed in many different ways. For example, Yahoo! Finance uses Benzinga’s Analyst Ratings API to show recommendation trends, average rating, average price target, and each individual upgrade/downgrade for each stock. Each brokerage displays the data in a unique way - the modularity of the Analyst Ratings API is one of the reasons that it is so popular among the fintech community.
Benzinga News API vs Competitors
Media sites across the globe produce content for consumption, without them the world would have a hard time obtaining the news that they are looking for. Different sites fill different content niches, focusing specifically on stock news, there are hundreds of different websites posting content regarding company updates, filings, mergers, acquisitions, analyst ratings, earnings, guidance, economic numbers, policy changes - anything that could move a stock.
Some media sites, such as Benzinga, allow platforms to republish their news for display. This news is delivered via API and integrated directly into a partner's app. The ability for a user to complete all of their research within their brokerage/app provides massive value and increases user engagement - the user can get everything they need without ever leaving the platform.
Other sites, including Bloomberg and CNBC do not allow partners to display fully embedded content. In other words, the content cannot be fully integrated into a platform. There are also a handful of news aggregators that take news from a bunch of different media sites and provide links back to the media site’s news. These links can be integrated into your platform, but if a user wants to read the entire story, they must click on the headline and leave your platform to see the content. These link-back feeds can often be noisy because multiple platforms will cover the same story, resulting in duplicate content.
In summary, an API is a way to connect and transfer data between different endpoints. APIs are used by some of our favorite apps and websites. Stock market data and news can be delivered to platforms via API for display, analysis or automated processing. There are many different flavors of stock market APIs, if you would like to hear more about what stock market APIs Benzinga has to offer, feel free to check out our data catalog and documentation.
How to Build a Brokerage
Building a brokerage depends on your creative determination as you breakthrough a crowded and massively profitable industry. You must ensure that you and your partners are licensed to sell financial products. Your business must be licensed by the FINRA, SPIC or NASAA. Additionally, you must register with the SEC and receive approval to fill stock orders.
The heart of your business, however, is your customers. Your business plan should reflect how you plan to make money, charging trading fees, trading your own accounts, managed consumer accounts, offering automated trading, etc.
You must also determine the financial instruments you plan to manage. You can manage everything from stocks, options and futures to crypto, forex and more. Using the Benzinga API ensures that your customers see current information, thus improving their results. Using trustworthy services such as this show your customers that you take your business seriously, and you can continue adding information to the site or app as needed.