European Fund Managers Blanch at Data Costs
Fund managers told European regulators market data fees in the region are too high in comparison to the US and pushed for a regulatory solution.
The European Securities and Markets Authority has been consulting on the revised Markets in Financial Instruments Directive, which covers trading in the EU. Esma published market responses to the MiFID II proposals from firms that chose to make them public.
Blackrock, the world’s largest fund manager, wrote that it supported the European Commission’s findings that data charges in the EU are too high, particularly in comparison to the US.
The fund manager suggested that transparent disclosure by venues of their pricing would help constrain the rising costs of data across the EU.
BlackRock said: “This measure will enable investment firms to compare the relative metrics per venue. Such enhanced transparency will act as a material break on increasing data costs.”
BlackRock also supported the proposal that the European Commission should carry out a review after three years, or less, if there is evidence that implemented measures have not met their regulatory objectives.
“It would then be appropriate to review the outcomes provided by the market and consider whether a usable consolidated data stream has been created,” added BlackRock.
Baillie Gifford, the Edinburgh-based asset manager, wrote that prices for trading data vary significantly but there is no transparency as to why they are so different.
Baillie Gifford said: “Using Bloomberg as the supplier, the Level 2 pricing data from the LSE costs $270 per month, whereas Bats Chi-X Level 2 data for the same market is $80 per month, and Level 2 data from NASDAQ in the US market is only $58 per month.”
The Scottish firm said data forms part of a wider service agreement with Bloomberg which also covers products such as order routing, news and analytics.
“Bloomberg simply passes on the cost of feeds to us whenever the exchanges chose to increase their prices, and as such we feel that the exchanges themselves are at fault for not providing feeds on a “reasonable commercial basis”, and are not regulated sufficiently enough in this regard,” added Baillie Gifford.
Its response said Esma’s disclosure requirements are a step in the right direction towards making exchanges more accountable and transparent but do not guarantee that prices will be “reasonable”.
France’s Groupama Asset Management said its members are not usually charged directly by the venues or the exchanges for market data but receive them from a data vendor.
“Our members are of the opinion that the fees are high, often in forced bundles to have all relevant information to us and without much room for negotiation,” Groupama added. “We however assume that it is up to the regulators and anti-trust authorities to investigate these prices and practices to make sure that those are not manipulated.”
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