Market data renewal charges for ratings agencies and index providers have seen “significant” inflation-busting increases, by as much as 12 to 13%, with an increase in inconsistency of charges for identical products and use cases.
That’s according to the latest Substantive Research’s latest analysis of 2023 market data pricing, which also reveals opacity in pricing despite an impending Financial Conduct Authority (FCA) review of practices in the sector.
The analysis shows that for anyone renewing market data contract agreements in 2023, the repricing has been “comprehensive and aggressive”. The study also shows that these aggressive percentage price increases are being applied to those paying much higher multiples, meaning their price inflation carries a much higher cost.
In August 2023 the FCA released its update on the Wholesale Market Data Study, stating that it will publish its findings in March 2024, with a focus on competition and the risks of bundling core services with other data services that make it harder for users to switch, and stifle innovation in the market.
For ratings agencies, the average price increase for an unchanged customer use case is 12% – not including year-on-year inflation increases within a multi-year contract. For index providers, the average price increase for an unchanged customer use case is 13% – not including year-on-year inflation increases within a multi year contract. A number of outlier providers are repricing clients by up to 600%, the report claims.
Mike Carrodus, CEO of Substantive Research, said: “Data consumers looking to understand pricing models and finding ways to efficiently manage market data budgets are presented with the additional challenge that market data providers and vendors are also introducing material changes into their current pricing structures. These include increased bundling of products, when consumers may only wish to buy and pay for a specific product inside that bundle, and changes in primary pricing mechanisms, making it even more difficult for consumers to compare costs against previous agreements.
“While it is a challenge for data providers and vendors to apply standardised pricing models for such a varied and constantly evolving client base, greater transparency is something both consumers and regulators will understandably be seeking to achieve in 2024.”
© Markets Media Europe 2023
