Financial market data
The financial industry's spending on market data has been rising for decades. In 2022, these costs will amount to around 64 billion US dollars worldwide - a new record. And they continue to grow. Fund companies, too, are dependent on financial market data, but ultimately the end investor bears the cost increase. The BVI is campaigning for the cost-effective procurement of data and thus, among other things, for a "consolidated tape".
„Data is the new oil“ - this statement also applies to the fund business. The prerequisite for the provision of services along the entire value chain in asset management – that includes research, trading, clearing, settlement, compliance, risk management, sales or reporting - is secure access to and availability of high-quality financial market data at all times. These data are provided by monopolies, such as stock exchanges and rating agencies as well as by companies with a dominant market position such as large index and data providers. These suppliers can determine the conditions, since their clients, e.g. fund companies, cannot operate without the data or they will endanger their own businesses.
For years, the use of financial market data has been associated with regular, sometimes massive price increases for fund companies. In addition, there is a de facto obligation to subscribe for increasingly complex data licenses, which are intended to cover any use and dissemination of data in the asset management value chain right through to the customer.
Against the backdrop of increasing dependency on data providers and the rising cost of financial market data, BVI's Financial Market Initiative is campaigning for the cost-effective and simple procurement of stock market prices, index, rating and ESG data particularly required by fund companies.
Among others, our initiative is focusing on regulatory issues. We therefore welcome the envisaged introduction of an EU ticker (consolidated tape) for equities/ETFs, bonds, and derivatives. It will ensure transparency and comparability of stock market prices and thus contribute to building a European market in line with the EU Commission's objectives for a Capital Markets Union. Accordingly, the EU is currently revising the Markets in Financial Instruments Regulation (MiFIR). The BVI, AFME, Cboe Europe and EFAMA have published a joint position paper setting out several principles required for implementing an equity ticker.
To ensure a better protection of data users, we are also calling for efficient provisions in the Benchmark Regulation and the Credit Rating Agencies Regulation (CRAR). Since 2020, for instance, we have joined forces with the German Insurance Association to advocate data cost rules in the CRAR.
We are also working with the French fund association AFG and the Paris Europlace association to achieve a harmonised regulation of fees and licensing conditions for all data providers operating in the EU.
In addition to these regulatory issues, BVI's Financial Markets Initiative is focusing on four other key areas: competition law issues, fostering standards, advocacy vis-à-vis data providers and communication activities.
Together with other European associations, we have filed a competition complaint against CUSIP Global Service (CGS), the issuing body for U.S. securities identification numbers. This is to prevent CUSIP and other data monopolists and oligopolists from using their market power to enforce any non-existing data-copyrights by contractual agreements. If our filing will be successful, any licensing models of exchanges, index and rating data providers based on such agreements would be prohibited.
We also advocate appropriate standards to expand the availability of low-cost data to fund companies, thereby reducing the cost burden. Among others, we promote the use of global, royalty-free (ISO) standards.
In addition, we are engaging with data providers to promote low-cost, preferably license-free, high-quality data products and services.
Policymakers are increasingly recognising how powerless individual users are in the face of market-dominant data platforms. We reinforce this positive momentum in favour of data users by rolling out various communication activities.
