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We consider that the draft Guidelines will further strengthen the MiFID level 1 and level 2 measures and will foster the establishment of a cost-based approach for market data procurement. Therefore, we would be in favour of turning the proposed guidelines into binding regulation. Furthermore, we strongly encourage increased supervision by the NCAs under a ESMA harmonized approach to ensure consistency in supervision and enforcement, also of the proposed guidelines.
Regarding the proposed Guidelines per se, we consider that further discipline is required, especially in the field of competition between (i) the main price data sources (the “primary exchanges”, Regulated Markets (RMs) and other trading venues enjoying a reference price data monopoly), (ii) other market participants (MTF, SI) and (iii) other value-added data service competitors relying on exchange prices for their products (such as index providers). Licenses for the reuse of data by Regulated MD Providers under MIFID (MDP) should be viewed with caution because IP rights do not exist for simple data such as prices and associated MD. The GL should make sure that MD providers ensure that the same MIFID product provided directly by the regulated MD provider is provided by the MD.
Beyond the Guidelines, ESMA should support Level 22 regulation and address the shortcoming of the MIFID MD price setting mechanism (RCB). Without a clear cost canvas, regulated MD providers will include as much operating cost as possible in their calculation of market data cost. Furthermore, without that canvas, it is difficult to compare MD cost between venues and it is impossible for NCAs to ensure enforcement. To counterbalance this shortcoming, we support both the IEX report3 (which contains the needed information on the relevant costs as a blueprint for EU trading venue MD production cots disclosure) and the Copenhagen Economics guideline on the creation of a cost benchmark within the present MiFID regulatory framework.4
In that perspective, we welcome the guidelines and any changes to applicable supervisory laws that are needed to
- close gaps in the existing MiFID legislations,
- achieve a coherent regulation and supervision in the EU of financial market data cost,
- impose cost, price and license transparency rules across the different market data providers.
Lastly, we ask ESMA to extend the Guidelines to other types of data providers, i.e. beyond MiFID (e.g. ESG data providers, index providers) as the issues we are facing are very similar in all cases of Data Providers.
More widely, the similarity of such issues would clearly justify an EU holistic Action regarding Data Providers, to set at Level 1 the same high-level principles (on price transparency, price setting, legal responsibility when delivering data as a paid service, etc.), to be complemented in siloed technical details depending on each area covered (Market Data, ESG Data, Index Data).
Such Level 1 holistic principles could start from existing provisions, not only included in MiFID but also in other pieces of legislation (e.g. CRAR), to be complemented by some more recent contributions from regulators, such as the joint French AMF/Dutch AMF report on ESG Data Providers. ...