FCA to review wholesale data markets competition concerns

The regulator said a review set to be launched this summer will examine whether complex contracts for benchmarks and indices, which are used by market participants to track and evaluate asset prices and investment performance, prevent switching to cheaper or more innovative alternatives.

A second FCA market study will begin by the end of the year, tasked with determining whether high charges for access to credit ratings data, which help investment managers assess financial risk, is adding to investors’s costs and limiting new market entrants.

The FCA also announced that it will gather further information on competition in the market for wholesale trading data. Trading data includes information on how many financial instruments are being traded, what people are prepared to pay for them and the price at which trades are executed. It comes after concerns were raised that limited competition may increase investors’ costs and have an impact on the types of assets that investment managers buy and sell.

Sheldon Mills, FCA executive director, said: “Access to wholesale data is really important for those who want to make investment decisions. Without it, they lack the information they need to make properly informed choices. Our Call for Input and planned market studies are intended to ensure that competition is working well, that information is available to market participants that want it, and that innovation is keeping up with market developments.”