Abstract
As policy makers search for growth and competitiveness in their financial markets, this Study analyses the evolution of equity market data businesses and fee structures at Europe’s largest incumbent stock exchanges and their impact on the market.
It finds that these exchanges are increasingly reliant on market data revenues to supplement a decline in their trading revenues. This results in high costs and restrictive clauses relating to the use of data that are hindering innovation and market growth with negative consequences for investors and issuers:
- Since 2017, the cost of market data has surged far beyond inflation, particularly for certain participants and activities. This rise lacks a clear rationale, as there are no separate costs for producing market data, the exchanges bear no cost for data distribution and the costs of running a trading platform are decreasing.
- Despite declining trading volumes, decreasing market share and fewer customers due to on-going industry consolidation and automation, the exchanges have managed to sustain, and even increase, their market data revenues.
- These data revenues, are, growing as a proportion of the exchanges’ total equity market revenue which means there is an increasing pricing disconnect between the price for market data and the trading activity that underpins it. The exchanges’ ability to rely on these revenues appears to reduce the imperative to grow trading services.
- When exchanges were not subject to competition in trading, data was free or had a very modest charge. Now, trading and data have become two separate revenue streams and it can be reasonably estimated that these exchanges have collectively earned a minimum of £5.67 billion/€6.7 billion from equity market data alone since 2007. Yet other new trading venues have been able to process as much or more volume than the incumbents and become profitable without relying on the same revenues from market data.
- Equity exchange services are now a minority business that contribute a fraction of the overall revenues at the incumbent exchanges. At the most extreme, it contributes to only 3% of overall turnover at LSEG and Deutsche Börse. Exchanges have diversified into other higher margin asset classes or data businesses, including equity market data.
The Study concludes that policymakers should rigorously challenge the current separation of data revenues from trading revenues and recommends that legislators should oblige all trading venues to treat data as by-product of the trading process it underpins.
April 2025 Update
Commentary on our report “There’s No Market in Market Data” has been significant, as would be expected given that there is a lot at stake when it comes to market data revenues and costs. We thank the many industry stakeholders that responded so positively to our study. This only highlights the need for prompt regulatory actions in the EU and the UK to address the issues raised and adopt the recommendations made in the report.
On April 9 2025, we issued a response to the published feedback by Euronext, Turquoise and FESE, who refuted a number of our findings.
> A detailed response can be found here.
We find there is little basis for their comments. We note that most of the observations and allegations are surprising given they are based on, and sometimes contradict, the exchanges’ own publicly available information. However, we have been provided with some clarification in relation to existing disclosures from Turquoise, as well as Euronext’s reporting methodology in 2020. We have amended the report to account for these technical clarifications and corrections, however, they do not alter the fundamental conclusions of the original report.
In the updated version of the report, we also provide new recommendations to:
- Improve the transparency and oversight of regulatory market data disclosures from trading venues and data services providers to address the issues that some exchanges have raised in relation to their own data as well as to improve the useful of the data.
- Ensure that the definition of “Reasonable Commercial Basis” means that trading venues cannot tie data charges to their customers’ costs of production. Once these are removed, it will become clear that data is simply a by-product of the trading process.
Read the Report
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