On 31 August 2023, the FCA published Market Study MS23/1.4: Wholesale Data Market Study: Update Report.

The FCA launched the market study on 2 March 2023, following persistent user concerns about how well wholesale data markets were working. The study focuses on competition in the provision of benchmarks, credit ratings data and market data vendor (MDV) services. It forms part of the FCA’s wider work on wholesale data, which includes the trade data review, whose findings and next steps were published alongside the launch of the market study. The FCA also launched a consultation (CP23/15) on its proposals to promote the emergence of a consolidated tape provider for bonds data in July 2023, which includes discussion of extending such a framework to equities.

The report provides the following progress updates on the market study:

  • There were 28 responses to the terms of reference from a range of stakeholders including benchmark administrators, trading venues, MDVs, financial firms and trade associations. Overall, the potential competition concerns in these responses were in line with previous issues highlighted to the FCA in these markets.
  • The FCA has been engaging with regulators in other countries to see if they are facing similar competition issues and how they are tackling them. This engagement has highlighted similar concerns about market features such as the lack of transparent pricing practices, excessive charging, bundling practices and complex licensing agreements.
  • Information was requested from a range of firms across the markets for benchmarks and indices, credit ratings data and MDV services. The FCA engaged with these firms to obtain qualitative information on a wide range of areas (including their product offering, business strategy, relationships with customers and redistributors, terms and conditions, as well as views on the competitive landscape and regulatory environment), financial information (such as revenues, costs, assets, liabilities and level of investments, both at a global and at a UK business level) and transaction data on historical customer contracts. The FCA will continue to conduct analysis on the nature and scale of harm and potential remedies as the study progresses. It also plans to engage further with stakeholders.

In the report, the FCA also confirms that it has provisionally decided not to make a market investigation reference (MIR) to the Competition and Markets Authority in relation to any of the three markets (benchmarks, credit ratings data or MDV) and it is now consulting on this provisional decision.

Stakeholders are invited to share their views on the FCA’s proposed MIR decision and the emerging themes and issues set out in the report, by 29 September 2023. The FCA plans to publish its market study report by 1 March 2024, which will include its findings on competition in these markets and its decision on whether to make an MIR, an explanation of its decision and other actions to address the issues identified.