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Market data is essential for achieving efficient price discovery and informed trading in capital markets. It enables investors, brokers, and other market participants to make optimal decisions by providing real-time transparency into current asset prices, trading volumes, and order depths. 

However, in recent years, the cost of market data has risen rapidly. This limits access to information, reduces price transparency, decreases cross-border competition, restricts market diversity, and harms smaller investors. 

Access to high-quality market data at a reasonable cost is crucial for maintaining fair, efficient, and transparent markets.

European Union

Completed in 2023, the review of the Markets in Financial Instruments Regulation (MiFIR) is helping to boost the efficiency and competitiveness of EU capital markets by: 

  • Addressing the ballooning price of market data.
  • Supporting greater access to market data for all end-users through the creation of a consolidated tape (CT).
  • Reducing cost and complexity in EU capital markets.

During the review, Eminence encouraged policymakers to apply policy principles that strengthen the current provisions on the pricing of market data, CT, and transparency.

Providing market data on a reasonable commercial basis

The price of market data increased dramatically due to rising demand following mandatory reporting requirements under MiFID. However, it is ultimately investment managers and their clients, such as pension funds, who bear the cost of these higher prices.

MiFIR rules encouraged market operators to provide data on a reasonable commercial basis (RCB) as per the European Securities and Markets Authority guidelines. While it was a positive step, these guidelines lacked legal enforceability, as made evident by the ongoing price increases. After the review, MiFIR empowers ESMA to better enforce the RCB requirement which helps bring market data costs down.

Consolidated tape

A comprehensive and well-functioning CT will foster greater market efficiency and further enhance the competitiveness of the EU’s capital markets by decreasing costs, reducing reporting errors, and improving transparency. 

Eminence supported the review’s establishment of an EU CT for asset classes, including: 

  • Equities
  • ETFs
  • Fixed-income products

United Kingdom

Eminence advocates for flexible, reasonably priced CTs for each asset class (equities/ETFs, bonds, derivatives) that allow managers to access only the data they need. This will support accessible, competitively priced market data that benefits all market participants and investors. A properly calibrated tape will enhance overall market competition by improving market transparency, price discovery, liquidity, and execution quality.

Eminence recommends that UK policymakers appoint a single consolidated tape provider per asset class through a transparent, public tender process as multiple providers would raise the risk of inconsistent data for the same trade.

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