US authorities urged to investigate ‘illegal’ changes to CME market data fee policies

EDI has called on the CFTC, House of Representatives, and the US Senate to investigate fee changes at CME Group that would increase costs each year for the firm. 

Data distributor Exchange Data International (EDI) has urged regulators in the US to investigate derivatives exchange CME Group’s proposed changes to its data fee policies. 

Under the changes to fees, CME Group intends to charge redistributors like EDI a total of $120,000 per year from 2021 for redistribution of data across each of its four markets.

EDI said the changes meant CME would also be able to charge for data that was already available in the public domain, including historical prices for commodities such as corn, crude oil, and gold. EDI referred to this practice as a ‘clear misuse of power’.

The data provider added that by asking redistributors to list their end clients CME Group could also charge end-users, which would negatively impact small and mid-size data vendors or cut them out of the market altogether.

The Commodity Futures Trading Commission (CFTC), the head of committees of the US House of Representatives, and the US Senate are among those that EDI has written to requesting an investigation into the fees changes by CME.

“CME Group regularly reviews its market data policies and pricing to ensure costs are aligned with the value of services our market data customers receive and expect,” CME told The TRADE in response to the development. 

“Vendors who are licensed to redistribute our historical data are free to give it away at no charge, price it as they see fit, or even distribute as part of a service they offer. This policy has not changed; the difference going forward is that vendors will be required to pay CME Group a redistribution fee to do so.”

The issue of market data fee changes has caused an ongoing and growing divide between exchanges and the investment banks, broker-dealers, and trading firms that consume their data.

In June, US exchanges Nasdaq and the New York Stock Exchange (NYSE) managed to successfully appeal a controversial ruling in 2018 from the Securities and Exchanges Commission (SEC) that said they had failed to justify an increase in data fees

EDI chief executive, Jonathan Bloch, added CME Groups proposed changes were an example of ‘monopolistic’ behaviours from exchanges that would put unfair financial pressure on vendors already struggling because of the pandemic. 

“The CME’s actions have not received much scrutiny from the regulators, certainly when compared to the regulation of fees imposed by the securities exchanges,” said Bloch. 

“As a result, the cost of obtaining data from the commodities exchanges will be exponentially higher. This is clearly anti-competitive, anti-trust, and according to our legal advisors, illegal. This must not be allowed to happen.”