The Financial Conduct Authority (FCA) has today begun a review into the use and value of data and advanced analytics in wholesale financial markets, both now and in the future.
The FCA is using its Call for Input (CFI) to better understand how data and advanced analytics are being accessed and used, the value offered to market participants and whether they are competitively sold and priced.
The FCA will use its CFI to determine whether it needs to do further work to address any harm that it identifies.
Christopher Woolard, Executive Director of Strategy and Competition at the FCA, said:
‘Wholesale financial markets play a vital role in our economy, and it is important that they work well. There is rapid and wide-ranging innovation in data in wholesale markets as firms become better able to gather and analyse data. More efficient, comprehensive and timely data for wholesale market participants have the potential to generate significant benefits. But these changes may also create new risks that may require us to act. We are launching this review to better understand any risks and assess whether FCA action is needed.’
The CFI considers the use and supply of market data, with a particular focus on trading data and benchmarks. Trading data and benchmarks play a vital role in wholesale financial markets.
They are used to trade, make investment decisions, to evaluate positions and to meet regulatory obligations. Trading venues and market data vendors also use them to provide other services, such as consolidated data feeds. The FCA wants to know whether users have concerns with the way trading data, benchmarks and vendor services are priced and sold.
The CFI also invites comments about access and the changing use of data and analytical techniques across all wholesale financial markets.
The FCA wants to further understand how innovations in data are generated and used, the value offered to market participants and whether data are being competitively sold and priced.
This will help to assess what the implications are for competition and market integrity in wholesale financial markets now and in the future.
The scope of the review includes both FCA-regulated and connected, non-regulated activities and firms. This will allow the FCA to examine how these non-regulated firms and activities may affect competition in markets that the FCA regulates.
The CFI is open for feedback until 1 May 2020. A Feedback Statement will be published in Autumn 2020, which will set out the findings and any next steps.