market data

In response to what it says were concerns expressed by some respondents to a previous call for input on the issue, the UK’s Financial Conduct Authority (FCA) is to launch two market studies to gather more information and investigate access to data in wholesale markets.

The FCA says that limited competition in the markets for benchmarks and indices, credit ratings and trading data may increase costs for investors and affect investment choices. In response it plans to launch one study in the middle of 2022 which will will look into concerns that complex contracts for benchmarks and indices prevent switching to cheaper, better quality or more innovative alternative providers.

By the end of the year, the regulator says it will launch a second market study to assess whether high charges for access to credit ratings data is adding costs to investors and limiting new market entrants.

The FCA will also now begin gathering further information on competition in the market for wholesale trading data. Trading data include information on how many financial instruments are being traded, what people are prepared to pay for them and the price at which trades are executed. It says that concerns have been raised that limited competition may increase costs and have an impact on the types of assets that investment managers buy and sell. It adds that a lack of competition could affect the quality of wholesale data and mean increased costs for investors.

“Effective competition is central to ensuring markets work well and is at the heart of the FCA’s wholesale strategy,” the regulator says. “To identify potential issues in the markets it regulates, the FCA can use one of its deepest analytical tools – the market study – to look more closely into these markets.”

“Access to wholesale data is really important for those who want to make investment decisions, without it, they lack the information they need to make properly informed choices.” says Sheldon Mills, executive director, consumers and competition at the FCA. “Our Call for Input and planned market studies are intended to ensure that competition is working well, that information is available to market participants that want it, and that innovation is keeping up with market developments.”