One year on from the implementation of MiFID II, the objective of this report is to inform the debate on the design of equity trading markets in Europe – in particular, market data services – by providing an economic analysis of the role of the price formation process, the impact of regulatory change and the value chain for market data services.

The Cologne Institute for Economic Research published the first part of an independent study commissioned by DBG in June 2016. The study from Prof. Dr. Hüther and Dr. Demary is the first part of a series consisting of three studies on economic effects of the purposed merger of Deutsche Börse and London Stock Exchange.

Is market data provided by trading venues too expensive? Would imposing price controls be expected to benefit the real economy?

New economic analysis by Oxera tackles these challenging questions. The results of the analysis question the need for regulation.

In recent years, there has been a debate about market data services provided by trading venues in Europe. The perception is that the fees charged for these services in Europe have increased and are far higher than in the USA. The European Parliament and the European Council agreed with proposals from the European Commission to require trading venues to provide market data services on “a reasonable commercial basis”, and allow for delegated acts to be passed by the Commission to clarify what this would mean. These rules potentially open the way for price regulation by the European Securities and Markets Authority (ESMA).

This Oxera report presents new empirical analysis and provides an economic framework within which the pricing of market data services can be analysed.

Additionally, Oxera provided the following documents that highlight other aspects of the discussion.

As a response to the ESMA consultation, Oxera published, in September 2014, a document regarding reasonable commercial terms for market data services. Ideally, this note should be read in conjunction with Oxera’s report (Pricing of market data services).

In addition, Oxera’s article “Is ESMA becoming a price regulator?”, also published in September, should be mentioned.