THETRADETECH DAILY news
THE OFFICIAL NEWSPAPER OF TRADETECH 2023
Regulation
New research finds some buyside firms paying 26 times more than others for index data as FCA investigation continues
DISPARITY IN PRICING DOUBLES SINCE LAST SUBSTANTIVE RESEARCH REVIEW IN OCTOBER ; FOLLOWS FCA ’ S CONCLUSION THAT COMPETITION IN WHOLESALE DATA MARKETS IS NOT WORKING .
Some providers are charging certain buy-side firms 26 times more than others for similar index products and services , a Substantive Research report has found .
Substantive last reviewed the space in October , finding that some institutions were paying up to 13 times more than others for the same index data . But updated data following a survey of 60 asset managers from January this year has instead found it is actually double that figure .
In the ratings data market , the new data set has found that instead of some buy-side institutions paying over three times more than others , they are in fact paying more than five and a half times more .
“ It ’ s quite remarkably inconsistent . The first study we did found it was 13 times more and that was incredible ,” Substantive chief executive officer , Mike Carrodus , told the TRADE .
“ What that says to me is that this is quite an opportunistic market . There are lots reasons it could be challenging to be consistent as a pro- vider as all your clients are different and there will be other elements bundled in such as additional licensing . You need to get to apples to apples . We do a lot of normalising work which is extremely complex across venues , locations , user bands , distribution licenses etc .”
“ There ’ s a lot of bilateral negotiations going on . There ’ s no real transparency here and that ’ s how these extremes flourish . If there ’ s only three ratings agencies that doesn ’ t put me in a very strong position to negotiate because everyone knows I need all three .”
The FCA ’ s recent findings The data follows the UK FCA ’ s conclusion last week that competition in the wholesale data markets was not working , finding that some markets are concentrated among just a few firms , leaving little choice for institutions and making it difficult to switch providers , while the data selling process is too complex .
The extensive ongoing study is exploring various areas across the data markets , including pricing levels and the potential for discriminatory pricing . And , whether or not dominant firms within this market practising it are damaging competition in a way that is ultimately harming end-investors . One specific area the regulator has said it will examine is whether prices are different because of a willingness from consumers to pay .
In terms of next steps , the FCA has now launched a new wholesale data market study under the Enterprise Act , inviting any persons
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