Ipug Eyes Euronext Index Bundle, Fee Hikes

In recent weeks, the Scottish arm of UK market data consumer group Ipug has met to discuss benchmark index licensing issues and what it claims are “anti-competitive” changes to the way NYSE Euronext bundles its benchmark index data, which the exchange streamlined last year following a rationalization designed to simplify its data products, and raised prices for its Level 2 datafeed.

On Nov. 1, 2011, the exchange bundled its index sub-packages into a single All Indexes package, having previously separated these packages in 2008 (IMD, July 11, 2008). NYSE Euronext’s Market Indices Package—which included the CAC40 French stock market index—and its Volatility and Strategy Indices were previously available separately for €4, €3 and €2 per user per month, respectively. However, these packages are now only available as part of the All Indexes package, which contains national indexes for other Euronext markets, for €9 per user per month.

At the same time, NYSE Euronext increased monthly fees for its Cash Level 2 feed—which provides real-time, full-depth market data for the exchange’s four cash markets in Amsterdam, Brussels, Lisbon and Paris—by 15 percent from €73 per device to €84 per device. End-user firms facing higher costs as a result of the changes have accused the exchange of arbitrarily changing policies to increase fees.

At a meeting of Scottish Ipug on the Feb. 21, executives outlined the changes for member firms that may have been unaware of the restructuring. “Customers are saying that they do not like bundling as it is forcing them to buy three index products when they only want one,” says one Ipug executive. “It creates an anti-competitive environment where indexes are bundled under a new data policy. In line with previous actions taken by European market data associations with the European Commission’s directorate general for competition, members are reserving the right to engage once again with the Commission on this topic.”

Virginie O’Shea, analyst at Aite Group, says it is not unusual for data providers to bundle and unbundle their data, but adds that it is often unpopular with consumers. “Industry bodies like Ipug have been campaigning to try to stop the vendors from doing that because pricing packages change dramatically when they bundle things together. It’s a real point of contention, as it brings up the cost of market data, and once one vendor does it the others do it too, so users are worried about the knock-on effects,” she says.

Cameron MacDonald, senior product manager of global index and European cash market data at NYSE Euronext, defends the rationalization project, which was designed to “standardize and simplify” its product mix where multiple permutations of products had evolved. The exchange began the project at the start of last year, and notified clients over the summer. MacDonald says the exchange decided to re-bundle the Market, Volatility and Strategy index sub-packages after poor uptake. “For two of [the sub-packages] the number of customers was minimal. The Market Indexes package had a few more, but the vast majority of clients are on the All Indexes package, so in terms of administration and organizing, it made more sense for our customers,” he adds, though the Ipug executive disputes this, saying that the CAC40—the main appeal of the Market Indexes package—is used ubiquitously by banks.

MacDonald acknowledges that fees will increase for consumers of the discontinued Market Index package, but says that the other indexes provide extra value, and complement the Market indexes. “And if it comes down to price … we kept it at a competitive price point,” he says.