Market Structure Partners (MSP) has individually rebutted every complaint made by exchanges in response to their original research exploring the market data landscape suggesting several are “unsubstantiated noise”.
Niki Beattie
“There is little basis for most of the feedback and […] and many of the comments are surprising, given that they are based on, and sometimes contradict, the exchanges’ own publicly available information,” said MSP in its latest report.
Among the most vocal in their responses to MSP’s February report entitled ‘There’s No Market in Market Data’ were Euronext, LSEG’s Turquoise and the Federation of European Exchanges (FESE). Wednesday’s comments focus on these three entities.
MSP’s original conclusions suggested that exchanges were supplementing suffering equity market revenues with soaring market data prices, despite the accusation of there being ‘no specific costs for producing market data’.
Exchanges immediately hit back, calling the findings “inaccurate” and “misleading”. However, in today’s latest report, MSP has individually responded to every complaint, reaffirming its original stance and calling for action by regulators.
Read more – Exchanges hit back at ‘inaccurate’ and ‘misleading’ accusations around market data costs
“Market data pricing should reflect exchanges’ actual fixed costs of production – not arbitrarily capitalise on consumers’ variable usage and dissemination patterns,” said Niki Beattie, chief executive of Market Structure Partners.
“When these unjustified charges are removed, the facade of a standalone market data business crumbles, confirming our original conclusion that data is simply a by-product of trading.”
There are some areas where MSP has re-clarified figures. In Wednesday’s report, the market structure specialists acknowledge specific feedback from exchanges regarding Turquoise and LSE disclosures, as well as Euronext’s reporting methodology, where they presented their 2020 market data revenue (MDR) percentage against total group revenue rather than total trading revenue, as required by regulation.
However, it has reiterated that despite these areas of feedback, the conclusions of its original findings have not changed.
The exchanges
Euronext made several complaints against the original report. However, most central was the suggestion that the basis for its conclusion – namely that exchanges offsetting declining equities volumes with market data cost increases – was incorrect.
“The report claims that the share of market data revenues over the total revenues of Euronext has increased from 11% to 19%, when in reality […] this ratio remained stable over the period at 11%,” said Euronext in its response to the original report.
MSP in Wednesday’s findings acknowledged that the 2020 disclosure had a denominator footnote that it had not seen and that it would update the report to include this.
Read more – Some exchanges pocketing nearly £5 billion from ‘inexplicable’ market data price rises, finds report
It reiterated however, that: “it does not change the fact that the disclosures in the following years used a more correct denominator which shows that market data revenue is increasing as a % of total trading revenue and that this has risen from 17% in 2021 to 19% of total trading revenue by 2023.”
Euronext also took issue with the fact that it was not contacted for the report, that it was inaccurate as it did not reflect Euronext’s acquisition of three new markets, and that it was an incorrect representation of Euronext’s customer base.
In response to these claims, Beattie and Market Structure Partners have reiterated that the report is based off of publicly available data, that the exchange had no issue with similar figures and findings used by Oxera in their reports in 2024, and that a universal definition of a customer should be agreed upon across venues and that a customer count should be disclosed on an annual basis.
The exchange also took issue with the examples used through either suggesting they were erroneous, unrealistic or unrepresentative. MSP’s report addresses the findings and reiterates its original methodologies.
The need for industry-wide dialogue
“The intensity of debate following the report’s publication only reinforces its significance and the need for a constructive industry-wide dialogue about creating markets that work efficiently for all participants,” said Mike Bellaro, chief executive of Plato Partnership.
Plato Partnership co-commissioned the original independent study published by MSP.
Also vocal in their rejection of the February findings was LSEG’s Turquoise. The trading venue took issue with several areas, including that the report misrepresented its volumes by suggesting they had decreased, misrepresented its pricing and was “flawed” with respect to documentation published by LSEG venues, grouping Turquoise with other primary exchanges instead of other pan-European MTFs.
MSP said in its response that it had only used Turquoise market data revenue disclosure figures as it could not find LSEG ones. MSP has subsequently removed Turquoise’s disclosure information and replaced it with LSE’s 2019 – 2022 disclosures.
“As stated, exchange disclosures are hard to find and, in the case of LSE, are published two years in arrears,” said MSP.
“We have since been provided with LSE disclosures and, therefore, retract the statement that only Turquoise Europe makes reasonable commercial basis disclosures. We propose to replace the Turquoise disclosures with those of LSE, so that all exchanges are compared on a like for like basis.”
It does, however, reinstate that despite the new figures it does not change the original findings released in February suggesting “MDR [market data revenue] growth has far outstripped the changes in turnover”.
Similar to its response to Euronext, MSP has flagged that LSEG’s Turquoise did not take issue with similar figures published by Oxera in its 2024 report.
LSEG’s Turquoise also took issue with MSP’s avatar used to simulate some of its findings in its original report, suggesting that it had created exaggerated figures. It also suggested that MSP had not taken into account that Turquoise had waived certain charges including private investor data charges throughout the acclaimed period. MSP’s report addresses these claims.
FESE response
FESE’s complaints with the report included that it contained factual errors, its proprietary method had been “tweaked”, contained issues around the calculation of data fee increases and had unfounded assumptions on IT infrastructure expenditure.
The association also took issue with MSP’s insufficient reasoning for price list expansion and misleading claims of unfair behaviours against direct competitors.
MSP’s Wednesday response suggests many of these claims are “unsubstantiated noise”.
Similar to its response to Euronext and LSEG, the firm has questioned why FESE took no issue with Oxera’s findings in 2024 – also noting that these had changed significantly from 2019 without any explanation.
MSP said Oxera claimed in 2019 the MDRs were ‘stable’ at €245 million, but in 2024 it revised the MDRs up to €298 million. “This is not a small tweak. It is a 21.63% increase […] which does not suggest revenues are stable, but there was no explanation of recognition of this change,” said MSP on Wednesday.
Regulatory recommendations
Beattie and MSP have suggested a list of recommendations that regulators should implement going forward to avoid any future lack of correlation in the numbers. Namely: ESMA and the FCA should keep an up-to-date repository of all trading venue and data service provider market data disclosures for their respective regions.
Trading venues and data service providers should log their disclosures in the repository of their respective regulators and should publish disclosures as soon as their annual accounts are published for the previous year.
The report also suggests that disclosures should be checked for consistency, that the definition of customer should be agreed and that cross-referencing disclosures to annual accounts should be possible and links should be explained.