Efama, the trade association for European asset managers, has called for reform of the wholesale data market.
The call, which was also made by the European Forum of Securities Associations comes on the back of the final report from the UK’s Financial Conduct Authority’s (FCA’s) Wholesale Data Market Study – an investigation into the level of competition in three key markets – benchmarks, credit ratings and market data vendor services.
While Efama stated that the report is of “high quality” and reflects many of its concerns around cost, lack of competition and barriers to entry, the association also criticised the FCA for delaying any further action due to the ongoing work to develop a consolidated tape for Europe’s equities markets.
FCA will not intervene in wholesale data market
“We find it incomprehensible and regrettable that despite the recognized shortcomings, the FCA has decided not to make a market investigation reference to the Competition and Markets Authority and to delay any potential amendments to the reasonable commercial basis (RCB) framework until after the implementation of the consolidated tape,” stated the association.
“We encourage the FCA to provide more concrete proposals for regulatory actions covering exchange data and data vendors, including ESG, credit rating agencies and benchmark providers.”
The wholesale data market has been a growing concern for asset managers and investors due to the increasing cost and market dominance of a select number of players.
High market data costs trigger calls for transparency and regulation
According to the associations, the higher market data costs affect the whole value chain because private investors and pension savers suffer from fewer choices, less transparency, higher costs, lower savings, and the companies may face reduced access to capital.
“Solving this issue is of utmost importance, particularly considering the detailed evidence of abuse of dominant position highlighted in the FCA study, and the UK and EU’s urgent objectives to achieve growth and competitiveness in their respective capital markets,” stated the associations.
