In 2021 the top 13 exchanges globally generated combined revenues of $44 Billion (Market Data guru article up 76% from 2016. Information services and related activities totalled $4.7 Billion (Specifically not including LSEG revenues from Refinitiv and ICE from ICE Data Services).

The amount exchanges and other data sources are earning from data is definitely increasing, but not all this is coming from core raw price data off their venues which for many has reached saturation points, rather value added services such as indices, analytics, and in the future new markets beyond financial institutions.

The genesis of the exchange data business comes in the 1990s as they de-mutualised to evolve into commercially driven entities answerable to shareholders demanding their cut. Today the more entrepreneurially minded exchanges, notably in the US and UK, have built substantial data enterprises which have diversified, yet most are content with following a narrow band strategy of pricing raw data for use by financial institutions active in their market, relying on raising prices to increase annual revenues.

This is compounded by high levels of non-compliance by data consumers not paying for their real usage, and exchanges over reliance upon audits when there are more innovative approaches available.

Arguably these are the problems.

So now the case for the defence.


Financial institutions and other data consumers do not subscribe to market data because they feel charitable, many aggressively, and rightly, try to keep costs down.

They do it to make money themselves, market data fees are themselves costed into the services they provide to their own clients. The questions they need to answer are:

  • Will cost savings from reduced market data fees be passed on to clients or kept in their own pocket?
  • If regulators place price caps and controls over market data fees, will this encourage them to look deeper into services offered by financial institutions using the data and introduce controls there as well?
  • Major institutions also now make money from data, or are looking to do so, should caps and controls be extended to their services too? The arguments are basically the same

In the market data space there are legitimate questions to be answered about pricing, with indices, and credit ratings increasingly highlighted. Equally high levels of non-compliance where data consumers do not pay their fair share, or exchange unevenly enforce their policies, unfairly skews the level playing field against honest competition. I would argue this should be a more pressing concern to all parties, as by eliminating non-compliance it reduces the need for price increases.

Exchanges are highly regulated entities, and come under pressure from their clients to do deals, so by adhering to the FRAND principle of ‘Fair, Reasonable, and Non-Discriminatory’ their market data businesses have strong reasons to justify why data should be paid for.

Keiren Harris 01 July 2022

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