|
|
Trading venues (exchanges and other multilateral trading systems) have a dominant position on market data generated by trading activity on their platforms and, due to regulatory requirements, there are no substitutes for their market data products. Under these uncompetitive conditions, many trading venues have dramatically increased prices for data which has had several negative implications for investors, capital markets, and the economy, says the report.
“As a global securities industry body, it is apparent that the rising cost of market data is a matter of significant concern in many jurisdictions" said ICSA Chairman David Lynch. “The efficiency of the capital markets in meeting the needs of its many business and investor users, as well as the broader economy, depends on the cost and quality of information that is available to them. The recommended principles recognise this and promote outcomes that are fair for all involved."
“Excessive market data fees harm investors and their beneficiaries, including pension funds who require reliable returns to fund workers' retirement." said Bryan Corbett, President & CEO of Managed Funds Association. “Access to market data enables investors to participate in capital markets, increases liquidity, and better serves all market participants. Market data fees must be closely related to the production costs of the data in the U.S. and around the world."
"The increased cost of data is forcing many asset managers to significantly scale back data purchases. This leads to less informed markets and decreased competition. The high cost of data also negatively affects the net performance of investment funds and, by way of consequence, the return to investors. The recommended principles help remedy this situation and address those concerns" added Tanguy van de Werve, EFAMA Director General.
The report recommends that market data costs (i.e. market data pricing, licensing practices, definitions, audit procedures, and connectivity fees) be subject to full regulatory scrutiny to ensure that market data fees and licensing practices are fair, reasonable, and not a burden on competition. It establishes three core principles:
The price of market data and connectivity should be based on the costs of producing and distributing the data with a reasonable mark-up and measured against a recognized cost benchmark.
Trading venues should standardize key market data contract definitions, terms, and interpretations. Standardized agreements should be subject to regulatory review.
Market data licensing contracts should be simplified to ease the burden of administration on broker-dealers and avoid unnecessary audits.
-- ends --
The full report can be accessed 
here.