Following a review that found cost and competition issues in the U.K.’s market for trading data, the Financial Conduct Authority (FCA) is undertaking a study of potential competition issues in the markets for benchmarks, credit ratings and data services.
The FCA released a report that found concerns about the quality of competition in certain parts of the wholesale data market, including data from equity and derivatives trading venues.
The report found, among other things, that some markets are highly concentrated, leaving users with little choice in buying available data, and the way data is packaged and sold can be complex. This combination of complexity and limited choice can result in high costs for industry firms that are then typically passed along to investors.
The FCA said it is working with the government to develop consolidated wholesale data, which can then be distributed in single standardized data feeds, which “could help improve the overall cost, quality and accessibility of wholesale data.”
The FCA’s report comes as the Canadian Securities Administrators (CSA) are currently engaged in their own review of similar concerns about the provision of market data in Canadian markets. The consultation period on the CSA’s findings, and possible solutions, recently wrapped up.
In the U.K., alongside the FCA’s report on the market for trading data, the regulator launched a new study into the competitive environment for other forms of data, including the market for benchmarks, credit ratings and market data vendors.
That study aims to look at whether competition issues could be driving “higher costs for investors, less effective investment decisions and preventing new firms entering these markets.”
“Our work aims to make sure that competition is working well in wholesale data markets, and market participants can access data they need,” said Sheldon Mills, executive director, consumers and competition with the FCA, in a release. “This is important to help foster the competition and innovation that will help boost the U.K. 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,” he said.
The FCA said it will publish a report of the results of the new study, setting out its findings and any recommendations, within 12 months. It will also make an initial decision by Sept. 1 about whether to refer any of these issues to competition regulator the Competition and Markets Authority.