The Financial Conduct Authority (FCA) is undergoing two market studies to look into access to the wholesale data market.
The UK watchdog has issued a call for input following concerns that a lack of competition among providers of benchmarks and indices, credit ratings and trading data may limit choice and increase costs for market participants, including asset managers.
The first market study will be launched in the summer and will look at the index market and the concern that complex contracts prevent users from switching to cheaper, better quality or more innovative alternative providers.
The second study will assess whether high charges in the credit ratings market are adversely affecting investors.
In the meantime, the FCA will also gather information on the cost of access to trading data.
The lack of competition among benchmark and indices providers has been a particular concern in the asset management industry for some time.
A white paper published in 2020 by three academics looked at the growing influence of the main index providers – MSCI, FTSE Russell and S&P Dow Jones. It noted that index providers no longer simply measure markets, they move them.
The ongoing consolidation among market data providers is also a concern for regulators in terms of a lack of competition and the potential for high costs.
“Access to wholesale data is really important for those who want to make investment decisions,” said Sheldon Mills, executive director, consumers and competition at the FCA. “Without it, they lack the information they need to make properly informed choices.
“Our Call for Input and planned market studies are intended to ensure that competition is working well, that information is available to market participants that want it, and that innovation is keeping up with market developments,” added Mills.