The UK’s Financial Conduct Authority (FCA) has announced it will tackle competition problems with the trade market data.
As part of a new report, the FCA found that competition in some parts of the wholesale data market was not working as well as it should.
It stated that access to quality and fairly priced trade data is important for the whole financial system. This allows for properly informed, timely investment decisions.
Trading data includes information on prices and volumes traded and supplied by vendors, such as stock exchanges, where shares and other financial products are bought and sold.
The FCA stated that markets where firms compete to provide good quality wholesale data will make the UK an attractive place to do business for a range of financial service providers. This would also bolster the UK’s international competitiveness, it claims.
The regulator has launched a market study following concerns that competition in other types of wholesale data markets might not be as effective as they should.
The study will investigate potential competition problems in the markets for benchmarks, credit ratings data and market data vendor services. As well as whether these could be resulting in higher costs for investors, be less effective for investment decisions and prevent new firms from entering these markets.
If the study finds evidence of competition concerns, the FCA will consider appropriate ways to address concerns. This could include rule changes as part of the upcoming adoption of retained EU law.
Sheldon Mills – executive director, consumers and competition at the FCA – said, “Our work aims to make sure that competition is working well in wholesale data markets and market participants can access data they need. This is important to help foster the competition and innovation that will help boost the UK economy and secure better outcomes for investors.
“We will use the findings from our wholesale data work and findings from our market study to guide us in our efforts to achieve these aims.”
Its initial report into wholesale data found that some trading markets are concentrated among a few firms, leaving little choice for users.
It also found that data sold can be complex and additional costs are caused by complexity and limited choice.
Last month, the FCA stated that e-money companies in the UK will need to undertake a ‘significant shift in culture and behaviour’ to comply with new Consumer Duty rules.
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