05.06.2014
By Terry Flanagan

IMA Says European Market Data Cost is Extortionate

Arjun Singh-Muchelle, senior adviser, regulatory affairs at the Investment Management Association said the group would support a competition review of the cost of market data in Europe and phased implementation of dark pool volume caps.

The IMA represents the UK investment management industry and its members manage more than £4.5 trillion of assets on behalf of UK and overseas clients.

Singh-Muchelle said at the MarketAxess European Capital Markets Forum in London last week: “The costs for accessing market data seems extortionate in Europe compared to the US. If the FCA and the European Commission were to carry out a competition review of this market; the IMA would support that.”

He said that in the IMA’s view, there are two approaches to introducing fairness to this market.

“Firstly, transparency on the variables used by trading venues to determine the price charged for market data,” added Singh-Muchelle. “Secondly, a cap on the relative income a trading venue is able to generate from the provision of market data. If both these approaches fail to reach the desired results, the IMA would support full, price regulation of this market.”

It is difficult for fund mangers to assess best execution in Europe as the region does not have a consolidated tape. The revised Markets in Financial Instruments Directive has asked the industry to set one up despite the COBA Project, a UK company, giving up on this initiative in 2013 due to the lack of industry support.

A consolidated tape is also required to implement the dark pool caps mandated by MiFID II. The directive sets a cap of 8% on the total consolidated amount traded in any stock during each day in dark pools and 4% of total trading per stock on a single dark venue .

“The IMA supports a phased-in implementation of the volume cap mechanism,” said Singh-Muchelle. “Beginning with the most liquid asset classes in January 2017, moving to the less liquid in June 2017 and then the least liquid in January 2018.”

Sharon Bowles, chair of the committee on economic and monetary affairs in the European Parliament also spoke at the MarketAxess European Capital Markets Forum and said asset managers will be a heavy focus for regulators in the future.

Andrew Haldane, the Bank of England’s executive director for financial stability, said in a speech last month that regulating investment funds was the “next frontier for macro-prudential policy” as they could be too-big-to-fail and pose a systemic risk to the global financial system.

A Mifid II consultation paper is likely to be released at the end of May and Singh-Muchelle stressed the need for the financial industry to provide quantitative data during the review process.

Featured image via Dollar Stock Photo

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