The UK Financial Conduct Authority (FCA) announced on Tuesday, January 11, that it will launch two market studies to investigate the competitive conditions to access wholesale data in financial markets, reported The Times. Following a market consultation in 2020, the feedback the FCA received from the main stakeholders is that there is limited competition in the markets for benchmarks and indices, credit rating and trading data.
Sheldon Mills, executive director, consumers and competition at the FCA, commented, “Access to wholesale data is really important for those who want to make investment decisions. Without it, they lack the information they need to make properly informed choices.”
The FCA is the UK financial regulator, but it also has powers to analyze competition concerns in these markets and impose penalties if it finds evidence of any breach of competition rules. Markets studies are an investigative tool that regulators use to gather information on how markets work, and companies operate. If the findings indicate that competition concerns are evident in the market, regulators can either impose measures to address these concerns or to open antitrust investigations.
A recent example of a similar market study by the FCA was on the Asset Management Market, where the FCA concluded that a few companies accumulated too much power in certain segments. The FCA imposed some measures on the companies to increase transparency in the market and avoid any possible coordination among the three main competitors, AON, Willis Towers Watson and Mercer.
According to the press release on this new study on wholesale data markets, the FCA “will look into concerns that complex contracts for benchmarks and indices prevent switching to cheaper, better quality or more innovative alternative providers.” Additionally, by the end of the year, the FCA will launch a second market study to “assess whether high charges for access to credit ratings data is adding costs to investors and limiting new market entrants.”
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