We asked for your input on the changing use and value of data in wholesale financial markets. Here, we set out our analysis, findings and next steps.
June 2022 update
Following our Feedback Statement on access and use of wholesale data, our trade data review is underway. We have updated the page to reflect this.
The review is a key strand of our work to promote competition and positive change, and for delivering our commitment to strengthen the UK’s position in wholesale markets as set out in our strategy for 2022-25.
We have now issued information requests to a sample of suppliers of trade data.
Background to the review
In March 2020, we published a Call for Input (CFI) on accessing and using wholesale data. On 11 January 2022, we published our Feedback Statement (FS22/1) and announced a programme of follow-on work, in particular that:
- We will conduct an information gathering exercise on trade data focussing on the pricing of trade data, underlying costs and the terms and conditions surrounding the sale of such trade data. We have now launched this review.
- We will undertake a market study to look at how competition is working between benchmarks, which we plan to launch in Summer 2022.
- We will undertake a market study looking at competition in the sale of credit rating data, which we plan to launch by the end of 2022.
On 1 March 2022, the Treasury published its response to the Wholesale Markets Review. Our trade data review will inform the development of consolidated tape (CT), which is one of the key proposed changes by the Treasury.
Focus of the review
As set out in our Feedback Statement, based on the responses to the CFI we have concerns that ownership of trade data by trading venues, which include UK regulated markets (RMs), multilateral trading facilities (MTFs) and organised trading facilities (OTFs), may give market power, resulting in:
- increases in data charges that may be increasing costs to end investors above those we would expect in a competitive market
- a level and structure of data charges that may be affecting asset managers’ investment decisions and so limiting competition between asset managers
- a level and structure of data charges that may be limiting the efficiency of trading activity in a way that affects price formation
We are also concerned that current regulatory provisions for free delayed data may not be effective.
The review is looking at these areas. If we find evidence that competition is not working well for users of trade data, we will assess the harm this is causing and propose remedies.
Requests for information
We have sent information requests to a sample of trade data suppliers in relation to equities, fixed income and derivatives. Our sample covers key RMs, MTFs/OTFs and approved publication arrangements in the UK.
We will issue a questionnaire to users of trade data in July 2022.
We also want to hear from stakeholders who do not receive information requests from us. We welcome engagement from you on the issues identified above and in the Feedback Statement. Please contact us at [email protected].
We aim to publish our trade data review findings and any next steps in January 2023.
We will publish more information on our planned work on competition in the markets for benchmarks and credit rating data later this year.