Nearly every exchange globally ‘licences’ the use of its data and utilises vendors for distribution to clients. It is higher margin and less volatile than traditional commission and IPO fees. However, the data consumer universe for straight price data and the number of delivery options is finite and quickly becomes saturated. For the majority of exchanges this point is reached when data hits +/-15% of total revenues.

At this juncture exchanges have three options to expand their revenues:

1.Raise prices. Which for the Western exchanges is now coming under fire, and is even having a negative effect as smaller players in any market find it unprofitable to maintain a presence and depart. These clients have successfully attracted the attention of regulators and now it appears just a matter of time before some form of price regime is imposed

2.Eliminate what MDG estimates to be an average of 22% revenue leakage which would mitigate price increases, but for some reason exchanges are reluctant

3.Develop their information services businesses through offering value added products, notably indices, analytics, pre to post trade solutions in order to have a presence across the entire workflow as shown in the diagram below


Option 3 is the hardest, but also through diversification offer the greatest long term benefits. The challenges stem because:

1.The resources and/or expertise are rarely inhouse, so needs to be brought via M&A, though this does have the benefit of bringing in ready made client bases and revenues. Downside is having to purchase a third party and integrate it.

2.As the purchased entities usually specialise in specific markets, particular asset classes, or function, in order to create a global service then several companies need to be bought. Because they are specialists they focus on the nuances differentiating trading in say fixed income from commodities, therefore integrating platforms becomes problematic

3.Building a critical mass requires investment, and only the largest exchange groups have committed to this

DBAG, ICE, LSEG, and NASDAQ have all invested heavily and successfully in diversifying to offer products and services that can extend beyond their own venues. This is key, because their own venues through trading volumes, sophistication of trading methodologies, and openness to participation which acts as the supporting client base enabling expansion to other markets. Each offers multiple data and trading solutions that are not reliant upon their underlying markets, enabling to compete anywhere in the world.

As the table below demonstrates there are 4 strategic areas for immediate development.


As already noted this is price data generated off an exchange’s day to day trading, can be distributed either directly but more often by aggregators, like Bloomberg, ICE Data, and Refinitiv. Note the last two are exchange owned. The market has almost reached saturation point


Benchmarks and Indices. Highly profitable, most exchanges calculate their own often linked to futures contracts on their own venues. Some have entered into partnerships with FTSE Russell and S&P, and there are often rumours of remorse. The more adventurous have built hefty index & analytics businesses catering for global markets and all asset classes, notably FTSE Russell and DBAG’s Quontigo. SGX also put a toe in the water. Unfortunately for exchanges there are few index creators with scale available, and buying them would come at a price. Exchanges have avoided credit ratings, partially because of the oligarchic dominance of the big 3 but also to avoid upsetting their own listed clients.


This is a step beyond offering an exchanges’ own internal data. LSEG is now more of a data vendor with the Refinitiv merger, SIX has for many years owned Telekurs (now SIX Financial) and the old Interactive Data (ICE Data-not its correct name) is a major plank in ICE’s offerings, whereas ASX for some strange reason sold its stake in IRESS. These are large Billion/Hundred Million Dollar businesses with global presences.

Exchanges have developed data malls as a cheap way to offer a range of low level services, only NASDAQ buying Quandl has really engaged.

None with the exception of JPX have an alt data strategy, yet all have entered or at least looked at ESG data. Primarily for their own markets, however DBAG is building a significant presence, especially by purchasing ISS. ESG data is proving a challenge thanks to fragmentation, lack of standards, and quality of offerings which is limiting opportunities.

Unsurprisingly exchanges offer reference data services however for the majority that do not own their own vendor, it is own market only


The fourth and currently final component in building end to end information service businesses across the Trade Workflow is driven more by solutions capability than the data. The exception is where a solution has been designed for a single market instead of multi-markets, i.e. measure of utility. The value chain in functional order is:

  • Analytics
  • Risk & Compliance
  • Pre-Trade & Execution
  • Post-Trade

The leading Tier 1 exchanges have now developed a presence in each area to differing degrees, especially compared to their peers, and by extension other exchanges. This is clearest indicator of divergence in service offerings.

No way are most exchanges going to fork out US$4.3 Billion for a SIMCorp, however the smarter ones will spot the opportunities that do exist. Specialisation is key.


As we can observe the leading Tier 1 exchanges are stratifying, the larger exchange groups are thinking globally, however their peers are lagging in their capability to go vertical and provide services across the complete trading workflow. These strategies focus around building out information services and solutions businesses to offer end to end products from data, decision tools, pre trade analytics, trading platforms through to post trade solutions.

The leading Tier 1 exchanges have been aggressive in building out their trade workflow and data solutions portfolios, and likely to be even more active to mitigate impacts caused by regulatory caps on their core venue price data sales.

These exchanges broad new data decision making and processing capabilities which directly drive trading make tie ups with Big Tech very attractive. While content is always fundamental, the key value add is in what can be done with it, and the tools emplyed to make it work for the data consumer.

An exchange’s presence across the trade workflow will define its success as a total solutions provider or content fodder.


Our final article will take a look at opportunities in new markets.

Talk to us about our consulting, and our independent advisory services

Keiren Harris 04 July 2023

For information on our consulting services please email

Please contact for a pdf copy of the article

#exchanges #LSEG #NYSE #NASDAQ #equities #futures #derivatives #bonds #fx