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Market Structure Partners( MSP) has individually rebutted every complaint made by exchanges in response to their original research exploring the market data landscape suggesting several are“ unsubstantiated noise”.
“ There is little basis for most of the feedback […] and many of the comments are surprising, given that they are based on, and sometimes contradict, the exchanges’ own publicly available information,” said MSP.
Among the most vocal to the report entitled‘ There’ s No Market in Market Data’ were Euronext, LSEG’ s Turquoise and the Federation of European Exchanges( FESE).
MSP’ s original conclusions suggested that exchanges were supplementing suffering equity market revenues with soaring market data prices, despite“ no specific costs for producing market data”.
“ Market data pricing should reflect exchanges’ actual fixed costs of production – not arbitrarily capitalise on consumers’ variable usage and dissemination patterns,” said Niki Beattie, MSP chief executive.
“ When these unjustified charges are removed, the facade of a standalone market data business crumbles.”
In the report, MSP acknowledged specific feedback from exchanges that protested the presentation of their 2020 market data revenue( MDR) percentage against total group revenue rather than total trading revenue, but reiterated that its original conclusions have not changed.
The exchanges Euronext’ s most central complaint was MSP’ s suggestion that exchanges were offsetting declining equities volumes with market data cost increases.
“ The report claims that the share of market data revenues over the total revenues of Euronext has increased from 11 % to 19 %, when in reality […] this ratio remained stable at 11 %,” said Euronext.
MSP acknowledged that the 2020 disclosure had a denominator footnote it had not seen.
However, it reiterated that:“ it does not change the fact that the disclosures in the following years used a more correct denominator which shows that market data revenue is increasing as a % of total trading revenue and this has risen from 17 % in 2021 to 19 % of total trading revenue by 2023.”
Euronext complained that it was not contacted for the report, its acquisition of three new markets was not reflected, and its customer base was incorrectly represented.
Beattie and MSP have reiterated that the report is based off publicly available data, the exchange had no issue with similar findings used by Oxera’ s 2024 reports, a universal definition of a customer should be agreed upon and a customer count disclosed annually.
LSEG’ s Turquoise took issue that the report misrepresented its volumes and pricing
New report rebuts‘ unsubstantiated’ exchange responses as latest episode of market data cost saga unfolds
LATEST REPORT INDIVIDUALLY ADDRESSES EVERY COMPLAINT BY EXCHANGES SURROUNDING THE ORIGINAL RESEARCH AND REAFFIRMS STANCE THAT THE COST OF DATA IS TOO HIGH.
Niki Beattie
and grouped Turquoise with other primary exchanges instead of other pan-European MTFs.
MSP said it used Turquoise market data revenue disclosure figures as it could not find LSEG ones. MSP has subsequently replaced it with LSE’ s 2019 – 2022 disclosures but reinstates that it does not change the original findings suggesting“ MDR [ market data revenue ] growth has far outstripped the changes in turnover”.
MSP has flagged that LSEG’ s Turquoise did not take issue with similar figures published in Oxera’ s 2024 report.
Turquoise also indicated that MSP’ s avatar used to simulate some of its findings had created exaggerated figures and suggested that MSP had not considered that Turquoise had waived certain charges including private investor data charges throughout the acclaimed period.
FESE response FESE complained that the report contained factual errors, its proprietary method had been“ tweaked”, contained issues around the calculation of data fee increases and had unfounded assumptions on IT infrastructure expenditure.
It also took issue with MSP’ s insufficient reasoning for price list expansion and misleading claims of unfair behaviours against direct competitors.
MSP has questioned why FESE took no issue with Oxera’ s 2024 findings, noting that these changed significantly from 2019.
MSP said Oxera claimed in 2019 the MDRs were‘ stable’ at € 245 million, but in 2024 it revised them to € 298 million.“ This is not a small tweak. It is a 21.63 % increase […] which does not suggest revenues are stable,” said MSP.
Regulatory recommendations Beattie and MSP have suggested a list of recommendations including that ESMA and the FCA should keep an up-to-date repository of all trading venue and data service provider market data disclosures and that trading venues and data service providers should log their disclosures and publish disclosures as soon as their annual accounts are published.
The report also suggests that disclosures should be checked for consistency, the definition of customer agreed, cross-reference disclosures to annual accounts and links should be explained. www. thetradenews. com 13