Trade bodies urge Commission to review MiFID II exchange data rules

Trade associations at a roundtable hosted by the FCA have questioned MiFID II rules on exchange market data pricing.

Several trade associations have called for the European Commission to review rules on market data pricing for trading venues under MiFID II.

A MiFID II implementation roundtable - hosted by the UK’s Financial Conduct Authority (FCA) in May this year – saw questions raised about trading venues pricing market data on a “reasonable commercial basis.”

The Association for Financial Markets in Europe (AFME), the Futures Industry Association (FIA), and FIX were among the trade bodies that attended the event.

Questions around the wording of regulatory texts, and loose terms like “reasonable commercial basis” have been flagged to regulators previously.

However the FCA asked attendees to provide views on exactly what they thought required the European Securities and Markets Authority’s (ESMA) clarification.

They collectively asked what reasonable and excessive margins look like if trading venues are not obligated to disclose costs of producing market data.

Minutes on the roundtable – which the FCA published only this month – revealed the Commission’s decision not to require publication of data costs, “reflected views from member states who were concerned the information was commercially sensitive not a public matter.”

It added: “Judgements about whether data pricing complied with the obligation to be on a reasonable commercial basis was something that would be examined.”

Trading venue’s now make more money from providing market data and research than from trading fees, second quarter earnings this year revealed.

Euronext reported revenues were up 2% in the second quarter this year, largely driven by its market data and indices products

Declines were reported across all other business units, with the biggest drop in sales witnessed in its derivatives trading units.

Similarly, the Intercontinental Exchange (ICE) posted its market data revenues surged 34% in the first half of this year.