Exchanges: No Free Data; Maybe Free Trading?
Exchanges say data will continue to have sufficient value to justify data fees, whatever changes occur in trading activity.
"Increasingly, trading platforms are competing for the same kind of underlyings. New regulation is going to continue to foster that kind of environment. Going forward, trading will become more like a commodity that you can get everywhere. But what you can't get everywhere is the data. The only value-add item will be the data," said Hartmut Graf, head of the information department at Deutsche Börse, adding, "Wouldn't it be better just to make trading free and charge for data only?"
Ross Stuart, senior director of global data licensing services at CME Group, described his time at the London Stock Exchange, to illustrate how the current landscape of ongoing regulation is unlikely to damage data's value. In 2007, the introduction of MiFID saw trading fragment between multiple exchanges and multilateral trading facilities. "LSE was finding that for its FTSE 100 stocks, it was commanding less than 50 percent of the market share... but the data was still essential for those wanting to trade on the other markets," he said.
While the regulation was damaging for the trading side of the business, "It didn't diminish the value of the data because it was still so important to have all of the answers... to be able to trade in an informed manner elsewhere," Stuart said.
Winnie Poon, head of market data at Hong Kong Exchanges and Clearing, agreed. Trading firms come to HKEx because "We create the market data, and no one can get the same market data from anywhere else.... We are well positioned to add value to the transaction cycle," she said, adding that if you can't get a product anywhere else, there is no reason why it should be offered for free.
Jutta Werner, head of content partners in Asia at Thomson Reuters, who moderated the panel, cited MiFID 2's mandate that data must be made available on a reasonable commercial basis, and asked whether this guideline would impact existing fees for market data.
Graf said that while the directive does require exchanges to follow certain practices, it also presents opportunities. "We have to adapt to a certain framework for justifying our market data fees. That will have an impact on the standardized market data which we are going to put out. But that [standard data package] is not necessarily everything that people are looking for. Market data as a whole is going to grow, and there is much more data that people are going to consume. Overall, this will be a positive impact on the data business as a whole," he said, adding that while the rules will put some constraints on what Deutsche Börse charges for market data in future, the fact that the rules say data should be available on a reasonable commercial basis-and not free of charge-means the regulators acknowledge that data has value, Graf added.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: http://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact info@waterstechnology.com to find out more.
You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@waterstechnology.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@waterstechnology.com
More on Data Management
MSCI counts the cost of bank M&A, looks ahead to custom indexes, AI
Cancellations of overlapping contracts following a bank merger put a dent in MSCI’s earnings, but management remains upbeat about the potential of recent acquisitions and new technology developments.
Nasdaq reshuffles tech divisions post-Adenza
Adenza is now fully integrated into the exchange operator’s ecosystem, bringing opportunities for new business and a fresh perspective on how fintech fits into its strategy.
This Week: HKEx's new derivatives platform; GoldenSource; Quonian-SimCorp, and more
A summary of some of the latest financial technology news.
Chris Edmonds takes the reins at ICE Fixed Income and Data Services
Edmonds is now leading ICE’s fixed income and data business as the rush to provide better data and analytics in fixed income builds.
Deutsche Börse democratizes data with Marketplace offering
Deutsche Börse Group is set to unveil its Marketplace, a one-stop data shop designed to simplify and streamline data acquisition and consumption for its clients, while also surfacing data from across the firm to its own users. Jan Stiebing and Sven…
DSB says industry is ready to meet UPI mandate ahead of deadline
The Unique Product Identifier will be required for certain OTC derivatives in the EU at the end of April, following US adoption in January.
Mapping a successful data journey: strategy, execution and sustainability
A well-planned data journey can positively impact an organization’s long-term trajectory. However, it is important to have clarity not only in the strategy but also in successful execution and sustainability for the long haul, argues data veteran Subbiah Subramanian.
The IMD Wrap: The growing data catalogue space
With their potential to manage costs and surface strategic datasets, it’s no wonder Max gets excited about data catalogs. This week, he takes a look at a new startup entering the space.
Most read
- Chris Edmonds takes the reins at ICE Fixed Income and Data Services
- Deutsche Börse democratizes data with Marketplace offering
- Waters Wavelength Podcast: Broadridge’s Joseph Lo on GPTs