The cost of market data in Canada lies at the heart of changes proposed by regulators to National Instrument 23-101 Trading Rules.

The cost of accessing real-time market data from all marketplaces has increased along with the number of visible marketplaces. The Canadian Securities Administrators estimate that the single monthly professional subscriber cost of accessing level 1 and level 2 data from all marketplaces is approximately $110 and $275, respectively.

“Marketplaces are monopoly providers of their own market data and data from one marketplace cannot be used as a substitute for data from another marketplace,” the CSA said in its proposing release for the Trading Rules changes. “This market power may allow some marketplaces to charge market data fees that are not proportionate to the trading activity on those marketplaces.”

Sean Debotte, CEO of Omega Securities said that regulator have it right in targeting market data costs and advocating a consolidated tape, similar to the Securities Information Processor (SIP) that in the United States. “There needs to be a solution similar to that which exists in the States,” he said.

The existing information processor in Canada addresses a non-existent problem, and fails to address both the unreasonably high cost of real-time market data for end users and the lack of appropriate secondary market transparency in Canada, according to Richard Carleton, head of Canadian Securities Exchange.

Vendors such as Thomson Reuters, Bloomberg and others already provide customers with access to consolidated data feed and information display products, Carleton said in a comment letter.

The services provided by the TMX IP, which undercut similar offerings from the vendors, appear to be designed to support the co-location, telecommunications and IT services offered by the TMX Group, Carleton said.

Carleton proposes that thee industry collaborate on the creation of a not for profit company to administer the provision of consolidated market data products to vendors and end users.

“Efforts should instead be directed at building an industry utility with a mandate to administer the provision of consolidated feed and information display products to consumers under a single contractual, administration and billing mechanism,” he said.
“In simple terms: one agreement, one reporting and administration system, and one fee for access to all of the market information sought by the consumer.”

Such fees would be subject to oversight from the regulators, and revenues allocated among the contributing marketplaces on the basis of an agreed formula. In arriving at this formula, a number of the benchmarks proposed by the CSA in evaluating individual marketplace fees for market data could be relevant.

Featured image via Dollar Stock Photo