As the London Stock Exchange (LSE) loses out to its New York counterpart in the listing stakes, the Financial Conduct Authority (FCA) has launched a study looking at whether the lack of competition in the wholesale market data sector is hurting the UK’s attractiveness.Â
The study will focus on the problems in benchmarks, credit ratings data and market data vendor services.
It will not only be looking at the potential high costs to investors but whether it is preventing companies from joining the UK markets.
The LSE has not had an easy time. The world’s largest building materials company CRH, with a market capitalisation of £30 billion, said today it is planning to move its listing from the LSE to the New York Stock Exchange.
Last year, Ferguson, the plumbing and heating products supplier, left the FTSE 100 after moving its primary stock market listing to the NYSE while Flutter, the world’s biggest publicly traded gambling company, is considering following suit.
London is also failing to attract new companies. In 2022, the exchange saw a dramatic 90% slump in initial public offering activity in terms of proceeds and a 62% drop by number of listings compared to the record highs of 2021
The FCA study is in response to its data report which found that there was paucity of effective competition and innovation in the market.
It noted that in some areas, there was too much concentration among a limited number of firms plus in general, switching providers proved difficult.
The watchdog said that if it finds evidence of competition concerns it will implement rule changes to address the problems and provisionally decide whether to propose to refer one or more of these markets to the Competition and Markets Authority for further investigation within six months.
“Our work aims to make sure that competition is working well in wholesale data markets and market participants can access data they need,” says Sheldon Mills, executive director, consumers and competition at the FCA.
He says, “This is important to help foster the competition and innovation that will help boost the UK economy and secure better outcomes for investors.”
In 2021 UK trading venues earned revenues over £200 million from the sale of trade data.
The FCA is working with the government to develop consolidated tapes, which should help improve the overall cost, quality and accessibility of wholesale data.
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