Backed by buy-side organisations including EFAMA, AFME and Plato Partnership, a report from Market Structure Partners has garnered criticism from exchanges – and raised concerns about losses the buy side could face under the Retail Investment Strategy.
The report sets up a fight between fund organisations and exchanges on the one hand, and a regulatory spat between the European Commission in Brussels and ESMA in Paris.
The Market Structure Partners (MPS) report asserted that European exchanges are increasing their data fees to compensate for poor market conditions, pushing up prices to make a profit amid low trading volumes, reduced market share, greater use of automation and a smaller customer base.
Exchanges cited in the report, including LSEG, Euronext and Deutsche Borse, have called the claims “misleading” and requiring “extensive corrections”, saying that any changes in market data fees have been aligned with the wider market landscape.
Arguments have also been raised that this is an effort by industry associations to detract from the impact the Retail Investment Strategy (RIS) could have on buy-side firms.
The RIS, part of the European Commission’s Capital Markets Union project, intends to improve protection and support for retail investors. It covers marketing, information provisions, disclosures and accessibility, and is expected to be finalised this year and come into play in 2026 or 2027.
ESMA, a commissioner of the MPS report, and the European Institute of Public Administration (EIOPA) have both voiced concerns about the RIS, calling for a simplified initiative and an evaluation of the administrative, human operational and consumer testing costs that it could require.
The claims
In recent years, value transacted on European equity exchanges has declined. The report cites a 17% drop at Euronext between 2020 and 2023, a 29% decline at Deutsche Borse, and a 26.9% decrease at Nasdaq Nordics between 2021 and 2023. However, drops in revenue were minimal relative to these figures, the report said: 0.5%, 12% and 8.8%, respectively.
At the same time, market data revenue as a proportion of total equity revenue was up at all three exchanges. Euronext’s rose by eight percentage points, Deutsche Borse’s by 10 and Nasdaq Nordics’ by four.
LSEG’s Turquoise saw the most drastic decline in trading turnover between 2020 and 2022, the report stated, down 61%. It noted that market data revenue went from 10.5% to 27% of total equity revenue.
These increased revenues have occurred without any changes in the cost of running a trading platform or producing market data, Market Structure Partners said. Instead, profits are coming from complex fee structures that charge for factors such as data consumption method and the number of devices able to access the data.
Thomas Richter, CEO of the German Investment Funds Association (BVI), argued: “Asset managers are legally forced to use stock market prices, benchmarks, credit ratings, and other data from third-party providers. Because of the existing oligopoly market structures with only a few providers per segment, there is a case for competition law authorities. We call for an EU data vendor act that regulates the commercial behaviour of these entities. Because if we don’t, the already considerable cost pressure in the fund industry will intensify even further – also to the disadvantage of the consumers.”
The impact of these structures is more acute for some firms than others; if one customer receives reduced costs, others will have theirs elevated. Market Structure Partners stated that firms competing with traditional stock exchanges have seen the sharpest cost spikes; with prices rising by up to 481% for trading venues and by between 97% and 170% for index providers between 2017 and 2024.
‘User type’ is a critical variable in fee structures, the report said. In response to market participants’ increased use of automation, and the impact this can have on exchanges’ revenues, having a machine handle data in place of a human can be between 35 and 97 times more expensive than it was in 2017, according to MPS.
Limits are also imposed on how exchanges’ market data can be used, the report said, with clauses preventing clients from including it in non-pre-approved projects. This is preventing innovation and market growth, it argued, going against one of the central responsibilities of exchanges in the financial ecosystem and preventing European market competitiveness.
Investment management group The Investment Association warned that the impact is more widespread than the report signals. Galina Dimitrova, director for investment and capital markets, told Global Trading: “The Investment Association has consistently expressed concerns about the escalating costs and complexity of market data our member firms need to purchase from trading venues, index providers and rating agencies. From the largest global asset managers to the smallest investment management firms – all have faced rising prices to acquire business-critical data. This experience is not limited just to the buy-side.
“It is high time we resolve these persistent issues and ensure that the market for wholesale data is fairly priced and accessible to all who need it.”
The counterattack
Exchanges have been quick to offer counter-evidence to MSP’s claims. Both Euronext and Deutsche Borse drew attention to an Oxera report published last September, which found that stock exchange revenues were stable between 2018 and 2023 and minimal increases in market data revenues were the result of regulatory change, inflation and competition for talent. For FESE member exchanges, it added, the majority of exchange revenue still comes from trade execution.
This report also directly opposes MSP’s statement that data dissemination costs are passed on to third parties, with Deutsche Borse highlighting: “DBAG did not pass on all additional costs for market data production and dissemination.”
LSEG has disputed the report’s figures, with a spokesperson stating: “The data presented in the report contains multiple errors and does not accurately present Turquoise’s trading volumes and market data costs. As just one example, the report says that ‘LSEG’ has increased its data fees for private investors by over 150% between 2017-2024. However, market data for retail investors on Turquoise has always been free and there was no change in the LSE data charge for this community over this period. Since January 2025, LSE fees for market data for retail have also been waived.”
A Nasdaq Nordics spokesperson agreed, saying: “The claim that exchange data fees are increasing is misleading; any price increases have been below inflation over the same period, and we are fully committed to fair and transparent pricing.”
On market growth, they added: “We are relentlessly focused on innovation and enhancing the resilience of our world class markets and data services, to ensure they keep up with the accelerating pace and sophistication of trading.”
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