The UK financial regulator should review the availability and price of market data following customer complaints that limited competition may raise prices and influence their investment decisions.
The Financial Conduct Authority said on Tuesday that it was concerned about market prices for benchmarks, indices and credit ratings, as well as trading data distributed to customers by stock exchanges, information providers and alternative trading venues.
Data is one of the most sensitive areas of trading, with stock exchanges and their intermediary and investor clients often arguing over ever-increasing costs and ownership of information. Benchmarks, such as London’s FTSE 100, are widely used in all markets, from stocks to derivatives, to estimate thousands of individual portfolios.
A study on market data services will begin in the summer, the FCA said. The regulator will launch a review of credit rating data by the end of the year, he added.
FCA review, which started in March 2020, follows similar studies by regulators in the US and the European Union on market practices and conditions for selling trading data.
Brussels he wants to make it easier for banks and fund managers to find stock and bond prices in the single market and ordered a “consolidated tape” that brings together information from trading venues in the block.
Data access and data pricing are highly controversial. The sale of trading data and financial benchmarks is a significant component of stock market revenues, but their clients, such as fund managers and high-frequency traders, often complain about rising costs.
Some regulatory mandates require investors to have the most up-to-date and accurate prices. Much of the market data is not standardized, which makes going to any place expensive and time consuming. Technical problems and high costs can also act as a deterrent to changing benchmark providers, the FCA said.
Stock exchanges say they provide market services that support the quality and reliability of the market, and its cost is only a fraction of the revenue that customers earn.
Regulatory pressure comes as the UK government examines a range of wholesale market practices, to boost the City of London’s global attractiveness to international investors after Brexit. Last year Chancellor Rishi Sunak devoted to help a similar record for the UK.
“Access to wholesale data is really important for those who want to make investment decisions. Without it, they lack the information they need to make well-informed choices, ”said Sheldon Mills, executive director of consumer and competition at the FCA.