Despite repeated regulatory reviews, fund managers and traders have continued to complain about the cost of accessing real-time stock prices. Stock exchanges and other providers of such wholesale data reasonably refute that they also have costs to bear.
The prolonged struggle would have been resolved under Mifid II rules. It aimed to make standardized data easily accessible to market participants. This has certainly not happened, as noted by the British Treasury in July review of wholesale markets. Now the UK Financial Conduct Authority has taken up the hugs and started a piece of reviews on Tuesday. The second one covers index benchmarks, another controversial area.
That data problem comes with a ready-made – and well-proven – solution. A consolidated band that collects and standardizes data from various exchanges and other sources has been running in the USA for almost half a century. It consolidates real-time quotes of each trading venue into a single feed. Low prices mean that many brokers do not charge clients for access.
Regulators across the Atlantic are also fans. The European Commission defends the concept under its Capital Markets Union package. It proposes that the supervisory European Securities and Markets Authority appoint some consolidated bond providers for equities and each other’s asset class.
The UK supports it, keen to prioritize fixed income data. Trading in that area is usually over the counter rather than on stock exchanges.
Yet market participants and, more importantly, prospective consolidated bond providers in the private sector are reluctant. The requirement to provide data on a “reasonable commercial basis” – fair fees and free after 15 minutes – is one deterrent. Avoiding conflicts of interest while managing the system is another matter.
The UK government is trying to win over doubters, and is proposing to roll back requirements such as 100 per cent coverage of stock data and free data after 15 minutes. To greet further only weakens a system that makes sense and has a proven track record. The launch of even more reviews, meanwhile, just kicks the gaze down the road.
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