Kilburn's Corner: To Fee or Not to Fee


I find myself between a rock and hard place. Two weeks ago, a data notification from Thomson Reuters passed over my desk in which the vendor informed end users that Japanese publisher, information and index provider Nikkei will introduce data fees for its Nikkei 225 index of the top blue-chip companies listed on the Tokyo Stock Exchange. As a result, Thomson Reuters is passing the fee on to customers.

At $5.35 per user per month, the fee is marginal, but it is a significant story because it is the first time in 60 years that Nikkei will charge fees. In the notification, under a section called “why is the change occurring,” Thomson Reuters stated that “Nikkei will introduce a new pricing policy for Nikkei Indices data effective 1 October 2016.”

Up until now, this has all the hallmarks of a standard market data price increase story, but here’s where things get interesting: A few days later, a representative from Nikkei reached out to me and said that the index provider has no current plans to introduce a new pricing model. 

When I went back to Thomson Reuters, the vendor reconfirmed that the fee has been imposed by the index provider. But then, when I went back to Nikkei again, a source was adamant that the price change “is a matter of an information vendor, not ours.” Since then, I have reached out to both Nikkei and Thomson Reuters and have received no further response. 

Everyone knows that data licensing is a contentious issue in the market data industry. Most data vendors, exchanges and index providers have their own licensing agreements, terms and pricing models, and—despite the best efforts of industry groups like the FISD—there is no standardization of policies. 

Market data departments at financial firms are flooded by notifications informing them of updates. The burden is on them, not only to comply with usage policies, but also to keep up with price changes. So here’s my question: What hope do end users have of keeping up to date with pricing and policy changes if data providers themselves disagree as to who is responsible for introducing them?

And it’s not like any of this is going away. In this week’s issue, our European reporter Joanne Faulkner reports from the FIA International Derivatives Expo in London, where industry participants say that exchanges are becoming more and more like data companies as they seek to diversify their revenue streams.

Speaking at the event, Intercontinental Exchange chief executive Jeffery Sprecher said the exchange’s revenue coming from data rose from 11 percent in 2006 to 41 percent in their most recent results, which he says is a “natural by-product” of exchanges moving away from transactional-dependent revenue streams to a service-based model. 

Meanwhile, Alex Kramm, senior equity research analyst at UBS who also spoke at the expo, says, “Everybody in the industry is going to end up paying more [for data].… That’s what I hear when I talk to banks and brokers out there. Not only is everybody coming out with new data products, but they also charge more every year.” In other words, market data is now big business—which means more fees, more fee increases and more notifications.

As a journalist, there is nothing much at stake from resolving the Thomson Reuters vs. Nikkei 2016 Gate—as I’ve chosen to name this saga—apart from getting down to the truth of the matter. But for market data managers, lack of information could have much more serious consequences; audits, fines and reputational damage. And that’s when all this starts to really matter—when it hits the bottom line.

 Having given it some thought, I suspect that the reason I am stuck between a rock (Thomson Reuters) and a hard place (Nikkei) is probably just a miscommunication between their respective media departments and commercial teams, but it’s two weeks later, and the mystery remains unsolved.

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