2010 Year in Review: Exchanges Balance Regulatory, Policy Changes

European exchanges unbundled real-time access to post-trade data in 2010 in a bid to avoid the European Commission imposing a mandated consolidated tape as part its MiFID review, while adopting new data policies to drive other revenues from their data businesses.

The debate over the consolidated tape began with the Committee of European Securities Regulators’ (CESR) May consultation paper, which suggested a mandated tape of European equity data to improve the quality and reduce the cost of pan-European data collection (IMD, May 28).

Data providers argued that these goals could be achieved by other means, while the Federation of European Securities Exchanges (FESE) committed to unbundle real-time trade data, help promote standardization of trade identifiers and make delayed data available for free (IMD, July 12), and the London Stock Exchange—one of the only European exchanges that is not part of FESE—announced similar plans (IMD, July 19). 

In response, CESR recommended that the market should have an opportunity to provide an industry-led option prior to any mandated solution (IMD, Aug. 2). To help achieve this, an industry working group set out standards to address trade data quality via common trade identifiers and rules to clarify who is responsible for reporting trades (IMD, Oct. 18). Most recently, the European Commission published its consultation paper on MiFID 2, including the option of an industry-led set of consolidated tapes using common standards and run by vendors, or a mandated, utility-style solution (IMD, Dec. 13).

Matters of Policy

But at the same time that exchanges unbundled their post-trade data, they were also changing their data administration and commercial policies to stimulate data revenues in other areas.

The London Stock Exchange began a direct billing and reporting initiative that enables multi-vendor netting to ensure that users only pay once for the same data viewed via multiple vendor displays and infrastructures, and announced UBS as its first client, while also introducing a new license targeting firms that use the exchange’s real-time data in non-display applications (IMD, Nov. 29).

Nasdaq OMX introduced a similar license for non-display use of its TotalView and PHLX feeds in the US (IMD, June 7), and also increased the price of its Nordic data products, but ended up delaying the price rise in response to user feedback (IMD, Aug. 23).

Meanwhile, the SIX Swiss Exchange put the squeeze on its multilateral trading facility rivals by proposing a new data policy to specifically target MTFs that use its data (IMD, Oct. 18), while NYSE Euronext changed commercial terms for viewers of its Liffe derivatives data by cutting costs for Level 2 accesses, and raising them for Level 1 data (IMD, Aug. 16).