The steady rise in the cost of market data for investment firms is a major concern for AMAFI members. AMAFI’s Board has responded by setting up a working group to examine the reasons behind the increase and make proposals to the competent authorities. Using this framework, AMAFI prepared a response (AMAFI /19-84) to ESMA’s consultation on prices for pre- and post-trade data since MiFID 2 entered into application.

In its feedback, AMAFI pointed out that MiFID 2 measures taken to lower pre- and post-trade transparency data costs (each type of data provided separately, data made available on a reasonable commercial basis, data made freely available after 15 minutes) have not delivered the hoped-for results. Several factors account for this:

• Pricing lists are more becoming more complex because of more refined segmentation of available data;
• Contractual frameworks are becoming more complex and harder to comply with;
• Required audit procedures are growing more costly owing to increased complexity;
• In some cases data are indispensable because there is only one provider.

Despite this, the revenues generated by most market operators either remain stable or have increased only slightly. The explanation for this puzzling outcome appears to be large-scale rationalisation programmes by market participants to curb overall costs. In addition, the MiFID 2 framework applies only to entities falling within its scope, whereas the value chain in which market data are produced relies not only on trading platforms but also on data vendors outside the MiFID 2 regulatory framework.

The RCB concept has proven hard for the industry and authorities to monitor. AMAFI therefore believes that the priority should be to make transparency requirements more effective. To that end, pricing lists, contracts, audit procedures and definitions need to be simplified, harmonised and made comparable. Trading platforms therefore need to work with their users to develop good practices. ESMA should not be forced to impose harmonising measures unless this approach fails to deliver results within a reasonable timeframe.

The soaring increase in market data costs has attracted attention not only in Europe but also around the world. The International Council of Securities Associations has set up a working group on the topic, in which AMAFI is taking part. And on 7 November ICSA is organising a forum on market data costs, to be hosted by the European Commission (see programme on AMAFI’s website).