Date: 22nd March 2019

Yesterday Oxera released a report entitled “The design of equity trading markets in Europe - An economic analysis of price formation and market data services” commissioned by the Federation of European Securities Exchanges (FESE). Through this research, FESE is seeking to inform the debate on the design of equity trading markets in Europe, particularly when it comes to price formation and market data cost.

The report demonstrates that market data is not overly expensive, representing just a small part of the costs borne by investors when holding and trading in stocks. The findings also indicate that the increase in revenues from aggregate market data from 2012 to 2018 is equivalent to an annual real growth rate of just 1%. According to the report, the costs are reasonable (data revenues of exchanges account for 10-15% of the total market data value chain) and have not increased significantly over time.

The report was released one year after the implementation of MiFID II, seeking to illustrate the importance of transparent trading, which in turn leads to more efficient and fairer markets and lower costs of capital for businesses. BETTER FINANCE welcomes this report and reiterates its long-held view, clearly expressed in its CMU briefing paper published in 2015, that the increased importance of “dark” capital markets at the expense of the regulated and more transparent ones, is particularly detrimental to individual investors.

The full report is available here.