British regulator opens study into wholesale market data

From Global Investor Group:

The UK Financial Conduct Authority has launched a study of the wholesale market data industry including benchmarks, ratings and vendor services after raising concerns about costs to users.

The British regulator opened the market data consultation on Thursday as the FCA presented the results of its separate trade data research, covering pre and post-trade data provided by trading venues.

“Our work aims to make sure that competition is working well in wholesale data markets and market participants can access data they need,” Sheldon Mills, executive director for consumers and competition at the FCA, said in a release.

“This is important to help foster the competition and innovation that will help boost the UK economy and secure better outcomes for investors. We will use the findings from our wholesale data work and findings from our market study to guide us in our efforts to achieve these aims.”

The FCA is inviting by March 30 views on its terms of reference and the possibility of intervention by the UK Competition and Markets Authority, with a view to publishing a report by March 1 next year, the regulator said.

“If the FCA finds evidence of competition concerns in one or more of these markets, it will consider the most appropriate way to address these concerns, including, for example, through rule changes as part of the upcoming adoption of retained EU law and wider influencing of international standards,” the FCA said.

In a separate report, the FCA has flagged concerns about effective competition and innovation in the trade data market. Issues raised include the paucity of firms supplying data and the complexity in pricing models which hikes costs for users. Joseph Cordahi, product strategy director at software provider NeoXam, said the concerns highlighted the need for efficient use of data at firms.

“This report by the FCA identifies evidence that rising trade data prices could be leading to instances where financial institutions are choosing not to purchase essential information, on account of cost,” Cordahi said in an emailed statement. “However, we also see situations where these same institutions will be repeating requests for data to providers, all because they do not have processes in place to reuse what they have already requested.”

The UK regulator has said its proposed consolidated tape will help standardise access to data.

“The FCA is working with the Government to develop consolidated tapes, which collect wholesale data across the market and distribute them in single, standardised data feeds,” the FCA said. “Consolidated tapes could help improve the overall cost, quality and accessibility of wholesale data.”

The European Parliament signalled on Wednesday agreement on an update to the Markets in Financial Instruments Regulation and Directive (Mifir/Mifid) rules on data transparency that include the development of a consolidated tape across asset classes.

The European securities regulator in January sealed a deal with its UK counterpart that allows recognition of British benchmark providers.

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