The UK’s Financial Conduct Authority (FCA) is planning a significant overhaul of the market data sector after its study revealed that a lack of competition is diminishing the UK’s appeal to international investors.
The FCA’s findings highlighted a market dominated by a few players, whose complex sales policies are restricting choice for data users and contributing to increased costs. Despite regulations requiring the free distribution of delayed data, many users find themselves compelled to pay for access due to limited options.
In addition to examining competition in trade data markets, the FCA has initiated a second study to explore potential competition issues in the markets for benchmarks, credit ratings data, and market data vendor services. The aim is to determine if these issues are resulting in higher costs for investors, impairing investment decisions, and obstructing new entrants from entering the marketplace.
If evidence of competitive concerns is found, the FCA will implement rule changes to tackle these issues and may recommend referring one or more markets to the Competition and Markets Authority for further investigation within six months.
Sheldon Mills, executive director of Consumers and Competition at the FCA, stated, “Our work aims to ensure that competition functions effectively in wholesale data markets, allowing market participants access to essential data. This is crucial for fostering competition and innovation, ultimately benefiting the UK economy and investors.”
In 2021, trading venues in the UK generated over £200 million in revenues from the sale of trade data. The FCA is collaborating with the Government to create consolidated tapes, which would aggregate wholesale data across the market and distribute it in standardized data feeds, thereby enhancing the cost, quality, and accessibility of wholesale data.