Even a sample can be toxic. Regardless of discounts, trials of alternative data require onboarding alternative data. Diligence is necessary, and we think best practices include an appropriate contract. While legal and compliance staff may face pressure to take shortcuts with respect to trials, one’s controls may be even more relevant where a trial is interesting precisely because the data is novel or collected in a new manner.

If one determines to treat trials differently from full licenses, then the distinction should be made on an objective, reasoned basis that is consistently applied and understood by the entire team (including front office personnel) possibly in a written policy – not on the basis of convenience. A clear and consistent trial policy may be particularly important now, as regulators continue to signal their interest in alternative data and funds increasingly adopt written data policies.