FIA EPTA response to the IOSCO consultation on Market Data in the Secondary Equity Markets (CR03/2020)

26 February 2021

The FIA European Principal Traders Association (FIA EPTA) welcomes the opportunity to respond to the International Organization of Securities Commissions (IOSCO) Consultation Report on market data in the secondary equity markets. In today’s markets, market data is of crucial importance for a wide range of investors and market participants – including FIA EPTA member firms. In order for our members to effectively make markets and provide liquidity, market data is essential and it would be impossible for our members to play the role they have in financial markets without market data. Our members require comprehensive pre-trade (order book) and post-trade (trade ticker) market data provided at the lowest latency for trading and risk decisions, sourced directly from the trading venue in co-location facilities.

In our response, we argue that market data provision in current European markets is inherently characterised by providers with a dominant market position, with each trading venue operating as a de-facto “mini-monopoly” in respect of the raw market data from that venue, i.e. the orders, quotes and trades that are sent to and occur on their venue. Due to this lack of competition market data fees are high and becoming increasingly prohibitive. In Europe, market participants are obliged under securities law to consume market data but the dominant position of market data providers allows for little negotiation in terms of cost. This acts as a major barrier to entry for new firms while stifling innovation and competition. This not only distorts efficient market 2 functioning but ultimately disadvantages end-investors as it is they who are finally paying for high market data costs as those are passed on in the financial system.

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