ESMA releases final report on market data obligations under MIFID II and MIFIR
01 June 2020 France
Image: stock.adobe.com/Yurii Zymovin
The European 网爆吃瓜 and Markets Authority (ESMA) has published its final report on MIFID II and MIFIR obligations relating to market data.
This lays down guidelines to help data providers meet their responsibilities, under MiFID II and MiFIR, to publish market data 鈥渙n a reasonable commercial basis鈥� and to provide access to market data free of cost 15 minutes after publication.
This final report builds on a consultation process that ESMA, the EU securities market regulator, ran from 6 November 2020 until 11 January 2021.
During this consultation, ESMA sought industry feedback on a number of draft guidelines detailed in its consultation paper and then solicited additional input through one-to-one consultations with key stakeholders, as well as advice from the 网爆吃瓜 and Markets Stakeholders Group (SMSG).
These guidelines apply to national regulators and trading venues, as well as consolidated tape providers, systematic internalisers and approved publication arrangements (APA).
The Markets in Financial Instruments Directive II (MiFID II) and Markets in Financial Instruments Regulation (MIFIR) require that market data is made available to market participants in an 鈥渆asily accessible, fair and non-discriminatory manner鈥�, while also encouraging steps to make market data available to a wider range of market participants and at lower average cost.
Many respondents to ESMA鈥檚 consultation paper highlighted the current complexity of market data policies, resulting in high administrative costs for users 鈥� particularly in understanding, and comparing between, market data fees of different market data providers.
Responding to this concern, ESMA adds new guidance setting out general principles for delivering market data in a 鈥渃lear and accessible manner鈥�. Guideline 1 requires market data providers to publish their market data policy, and all associated documents, in 鈥渁n accessible and user-friendly way鈥� on their website.
More broadly, these regulations demand that fees charged for market data should be based on the costs of producing and disseminating this data (although this may include the addition of a 鈥渞easonable margin鈥�). ESMA suggested in its consultation paper that the cost methodology should identify clearly how costs are incurred when producing and disseminating market data, along with a breakdown of direct costs, joint costs and other cost elements.
A number of respondents said during the consultation process that cost methodology should not be made public since this could expose commercially-sensitive information to competitors. However, these respondents did agree to share their cost methodology with the regulatory authorities.
The guidelines also specify that market data providers must offer market data on a standalone basis without being bundled with other services. In ESMA鈥檚 opinion, this unbundling of data delivery enables customers to 鈥渃hoose products according to their needs, without being obliged to pay for additional services which they do not make use of鈥�.
Respondents to the consultation paper largely agreed on the general need for unbundling of market data from other services. However, some warned that requirements to disaggregate data can be problematic, indicating that the 鈥渄emand for disaggregated data is low鈥� and the chain of data flow, including data vendors, 鈥渋s not set up for disaggregation鈥�.
Under Article 13(1) of MiFIR, trading venues are required to make data available free of charge 15 minutes after publication (鈥榙elayed data鈥�). The same obligation applies to consolidated tape providers and APAs under MiFID II.
In its consultation paper, ESMA acknowledged that there may be certain situations where it is appropriate for data providers to be paid for their provision of 鈥榙elayed data鈥�, specifically in cases of data redistribution or 鈥渧alue-added services鈥�. However, it specifies that charges should only be applied by the data provider when the data user 鈥済enerates a direct economic benefit via the selling of that data鈥�.
The application date for these guidelines has been set for 1 January 2022.
This lays down guidelines to help data providers meet their responsibilities, under MiFID II and MiFIR, to publish market data 鈥渙n a reasonable commercial basis鈥� and to provide access to market data free of cost 15 minutes after publication.
This final report builds on a consultation process that ESMA, the EU securities market regulator, ran from 6 November 2020 until 11 January 2021.
During this consultation, ESMA sought industry feedback on a number of draft guidelines detailed in its consultation paper and then solicited additional input through one-to-one consultations with key stakeholders, as well as advice from the 网爆吃瓜 and Markets Stakeholders Group (SMSG).
These guidelines apply to national regulators and trading venues, as well as consolidated tape providers, systematic internalisers and approved publication arrangements (APA).
The Markets in Financial Instruments Directive II (MiFID II) and Markets in Financial Instruments Regulation (MIFIR) require that market data is made available to market participants in an 鈥渆asily accessible, fair and non-discriminatory manner鈥�, while also encouraging steps to make market data available to a wider range of market participants and at lower average cost.
Many respondents to ESMA鈥檚 consultation paper highlighted the current complexity of market data policies, resulting in high administrative costs for users 鈥� particularly in understanding, and comparing between, market data fees of different market data providers.
Responding to this concern, ESMA adds new guidance setting out general principles for delivering market data in a 鈥渃lear and accessible manner鈥�. Guideline 1 requires market data providers to publish their market data policy, and all associated documents, in 鈥渁n accessible and user-friendly way鈥� on their website.
More broadly, these regulations demand that fees charged for market data should be based on the costs of producing and disseminating this data (although this may include the addition of a 鈥渞easonable margin鈥�). ESMA suggested in its consultation paper that the cost methodology should identify clearly how costs are incurred when producing and disseminating market data, along with a breakdown of direct costs, joint costs and other cost elements.
A number of respondents said during the consultation process that cost methodology should not be made public since this could expose commercially-sensitive information to competitors. However, these respondents did agree to share their cost methodology with the regulatory authorities.
The guidelines also specify that market data providers must offer market data on a standalone basis without being bundled with other services. In ESMA鈥檚 opinion, this unbundling of data delivery enables customers to 鈥渃hoose products according to their needs, without being obliged to pay for additional services which they do not make use of鈥�.
Respondents to the consultation paper largely agreed on the general need for unbundling of market data from other services. However, some warned that requirements to disaggregate data can be problematic, indicating that the 鈥渄emand for disaggregated data is low鈥� and the chain of data flow, including data vendors, 鈥渋s not set up for disaggregation鈥�.
Under Article 13(1) of MiFIR, trading venues are required to make data available free of charge 15 minutes after publication (鈥榙elayed data鈥�). The same obligation applies to consolidated tape providers and APAs under MiFID II.
In its consultation paper, ESMA acknowledged that there may be certain situations where it is appropriate for data providers to be paid for their provision of 鈥榙elayed data鈥�, specifically in cases of data redistribution or 鈥渧alue-added services鈥�. However, it specifies that charges should only be applied by the data provider when the data user 鈥済enerates a direct economic benefit via the selling of that data鈥�.
The application date for these guidelines has been set for 1 January 2022.
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