Market Structure Partners Publishes Its Response To The Published Feedback From Exchanges And FESE And Makes Further Recommendations

Commentary on the Market Structure Partners (MSP) report “There’s No Market in Market Data” has been significant, as would be expected given that there is a lot at stake when it comes to market data revenues and costs. The majority of feedback has been very positive from all sorts of direct and indirect participants, including innovators and academics.

Today, MSP issues a response to the published feedback from Euronext, Turquoise and FESE, who refuted a number of MSP's findings. The MSP response includes a public critique of the Oxera reports commissioned by FESE, given that they are constantly referenced by exchanges, including Turquoise/LSE. MSP believes that they contain some possible errors or issues. A press release and detailed response to every single comment can be found here or a PDF of both is attached below.

In summary, MSP finds there is little basis for the comments. However, MSP has been provided with some clarification in relation to existing disclosures from LSE, as well as Euronext's reporting methodology in 2020. These technical clarifications and corrections, however, do not alter the fundamental conclusions of the MSP report but MSP has amended the report to account for them. and they only serve to underline the need for immediate action.

In the updated version of the report, MSP also provides new recommendations to:

Improve the transparency and oversight of regulatory market data disclosures from trading venues and data services providers to address the issues that some exchanges have raised in relation to their own data as well as to improve the usefulness of the data in highlighting trends in the costs of market data.
Ensure that the definition of “Reasonable Commercial Basis” means that trading venues cannot tie data charges to their customers’ costs of production - a business model that is only possible when a customer cannot have discretion over whether it consumes a product. Once these are removed, it will become clear that data is simply a by-product of the trading process and will reduce some of the frictional costs currently impeding growth in equity markets.

The updated version of the report can also be found on the MSP website.