The UK's Financial Conduct Authority is promising an overhaul of the market data sector after a study found a lack of competition was hindering the UK's attractiveness to international investors.
Among the fiindings, the FCA report found market concentration among just a few firms aligned with complex sales policies leading to limited choice and additional costs for data users. Despite rules in place requiring delayed data to be distributed for free, many users end up with little choice but to pay for data.
Alongside its findings on competition in the market for trade data, the FCA has launched a second study that will investigate potential competition problems in the markets for benchmarks, credit ratings data and market data vendor services and whether they could be resulting in higher costs for investors, less effective investment decisions and preventing new firms entering these markets.
The watchdog says that if it finds evidence of competition concerns it will implement rule changes to address the problems and provisionally decide whether to propose to refer one or more of these markets to the Competition and Markets Authority for further investigation within six months.
Sheldon Mills, executive director, Consumers and Competition at the FCA, says: “Our work aims to make sure that competition is working well in wholesale data markets and market participants can access data they need. This is important to help foster the competition and innovation that will help boost the UK economy and secure better outcomes for investors."
In 2021 UK trading venues earned revenues of more than £200 million from the sale of trade data. The FCA is working with the Government to develop consolidated tapes, which collect wholesale data across the market and distribute them in single, standardised data feeds, a move which should help improve the overall cost, quality and accessibility of wholesale data.