Chi-X Europe will charge users of its market data from the beginning of next year, but trading participants and their buy-side direct market access clients will be exempt.
Effective from 1 January 2010, the venue will introduce annual license fees for “direct and indirect recipients of Chi-X market data”. The decision reverses Chi-X’s previous policy and breaks with rivals such as BATS Europe, Nasdaq OMX and Turquoise, all of which waive charges at present.
Hirander Misra, chief operating officer of Chi-X Europe, said that the move would not impact firms that trade on the platform and the decision was taken to recover some of the costs incurred in supplying data to multiple third-parties such as market data vendors. “The infrastructure costs a lot of money to run and to handle data capacity which the vendors use for commercial gain and enrichment,” he said. “The vendor licence fees are substantially less than the major European exchanges and cover pan-European data usage with unlimited use subject to our terms and conditions.”
The annual distribution licence fee for real-time level 2 data is £18,000, but Chi-X will not charge for delayed distribution of its data. Similarly, the MTF has laid out a price list for historical data, but this is waived if distribution is delayed by the recipient until after midnight London time until on the day of its original dissemination.
But fees are payable by market data vendors and others that wish to use Chi-X data “to create indices for external distribution or for use as the basis for pricing financial products”. Misra said that charging market data vendors to use and distribute Chi-X data would have no impact on their ability to deliver a free or low-cost European best bid and offer (EBBO) price feed to the buy-side based on data from MTFs.
“We support a pan-European EBBO and this license fee does not change this being possible in any way as Chi-X Europe market data remains free of charge to all individual users,” said Misra. “At a terminal level, a MTF EBBO can be free, but the question remains whether the venues and trading participants want to ultimately work together to define a reasonable revenue model around this where exchange fees come down and the MTFs derive some revenue from it, albeit a smaller amount which is largely cost recovery,” he said.