The European Securities and Markets Authority stepped into the midst of the never-ending conversation surrounding market data prices on Friday by announcing that it is launching a consultation on the subject.
In a statement, the pan-European regulator said that it would be examining the cost of pre- and post-trade data, as well as post-trade consolidated tape (CT) for equity instruments.
The consultation period will end in early September, and the regulator will then submit a final report to the European Commission in December.
“MiFID II/MiFIR aims at ensuring fair access to and lowering the cost of market data and has established the legal framework for the provision of a CT,” said the regulator.
“However, to date, no CT has emerged and, based on ESMA’s analysis, it appears that MiFID II has so far not delivered on its objective to lower the prices of market data.”
As the regulator implied, MiFID II and MiFIR forced significant changes upon market data providers when they went live in January of last year.
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Most notably, market data costs could not be bundled together. Instead, they had to be, in the words of ESMA, “disaggregated.”
As Finance Magnates reported last year, this has in many cases actually made market data more expensive for financial institutions.
In a complaint made to the Securities and Exchange Commission last September over similar regulation in the US, several buy-side firms said explicitly that separate costs had made market data more expensive for them.
Comparing the data to a hamburger, they said that while previously they had been charged $20 for the ‘whole sandwich,’ they were now paying smaller sums for individual pieces that, when combined, ended up being significantly pricier than the bundled ‘whole’ they had before.
Market data providers in the EU have attempted to justify the high cost of information, saying that different factors have pushed them to adjust their prices.
“We have received a lot of feedback as to whether the price for market data is reasonable, in addition to concerns on price increases and new fees in an environment driven by technological development and a high demand for market data,” said ESMA chairman Steven Maijoor.
“This new consultation forms an important part of the reviews of MiFID II as we assess developments in this area.”