The cost of fixed income market data has soared by 50% between 2017-2021, according to a new report – The Rising Cost of European Fixed Income Market Data – from the Association for Financial Markets in Europe (AFME) on behalf of Expand Research.
The report found that fixed income data costs were rising much faster than the average cost of overall market data due to .price increases of 35% on the existing cost base as well as new, incremental usage which accounts for an additional 15% of spend.
This compares to a 25% price hike for sell-side market data overall.
This report is based on data submitted by 10 major European fixed income market makers, all of whom are AFME members, as well as publicly available sources.
Expand collected European fixed income market data spend data from participant organisations for the years 2016-2021.
“Our latest report finds that fixed income market data costs have increased far beyond those for equity markets, which are already considered to be too high,” said Adam Farkas, Chief Executive of AFME.
He added, “Unnecessarily high market data fees act as a barrier to entry to financial markets and ultimately lead to detrimental outcomes for end investors through less choice and higher costs.”
Farkas said the report is aligned with recent concerns raised by the UK’s Financial Conduct Authority in its January feedback statement on accessing and using wholesale data, and with the EU Commission MiFIR review objective of enhancing users’ understanding of how the price for market data is set across asset classes.
“If market data costs go unaddressed, market participants may be forced to scale back their data purchases which could lead to other strategic decisions, such as withdrawing from certain markets.”
The report believes a first step to lowering the costs is to establish and apply a set of industry developed standards to fixed income market data across the industry.
These should cover standardised pricing models for purchasing data from all vendors as well as uniform formats in which the data is stored and provided to firms. It should also include a consistent procedure for accessing the data.
©Markets Media Europe 2022
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