How much is too much for market data?

The cost of market data and a lack of transparency around fees has become a topic of growing concern.

The FCA-hosted ‘MiFID Implementation Roundtable for trade associations’ event highlighted these concerns, as a number of trading associations called for the European Commission to review rules on market data pricing for trading venues under MiFID II.

According to The Trade, The Association for Financial Markets in Europe (AFME), the Futures Industry Association (FIA), and FIX were among the trade bodies that attended the event.

Fund managers have long criticized the high costs of market data for European exchanges when compared to the US and routinely challenged the current rules under MiFID which allows market data providers to “include a reasonable margin”. Critics point to a lack of clarity over what may or may not be deemed ‘reasonable’.

A report by the Tabb Fourm show that trading volumes, market-making profits, equity brokerage revenues and institutional trading commissions have all declined, but exchange data, access, and technology revenues are up 62%.

The minutes from the meeting also showed that “questions were asked what reasonable and excessive margin looks like if trading venues are not obligated to disclose costs of producing market data”, according to Trader Magazine.

There had been hopes that the European Securities and Markets Authority (ESMA) would cap market data fees or require more cost transparency in MiFID II. However, authorities decided not to require publication of data costs because members states were concerned the “information was commercially sensitive and not a public matter.”

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