The European Securities and Markets Authority (ESMA) published market data guidelines that apply to national competent authorities (NCAs), trading venues, approved publication arrangements (APAs), consolidated tape providers (CTPs) and systematic internalizers (SIs).
The guidelines aim to ensure that financial market participants have a uniform understanding of the requirement to provide market data on a reasonable commercial basis (RCB), including the disclosure requirements, as well as the requirement to provide the market data 15 minutes after publication (delayed data) free of charge. These guidelines also aim to ensure that NCAs will have a common understanding and develop consistent supervisory practices when assessing the completeness, comprehensibility and consistency of the RCB and delayed data provisions.
Among MiFID II requirements are principles to provide market data on the basis of the cost of producing and disseminating it and require market data providers to comply with a number of disclosure requirements aiming at enabling market data users to understand how market data is priced, to compare market data offers and to ultimately assess whether market data is provided on a reasonable commercial basis.
MiFIR requires trading venues to make data available free of charge 15 minutes after publication (delayed data), and the same obligation is provided by MiFID II in respect to APAs and CTPs. Some of the provisions on market data in these regulations apply also to market data providers offering market data free of charge, notably the requirement related to making market data available to all customers on the same terms and conditions, the requirement to have scalable capacities in place to ensure that customers can obtain timely access to market data at all times on a non-discriminatory basis and the requirement to offer unbundled market data are applicable to such market data providers.
Market data providers should not charge for indirect services necessary for accessing market data when providing data free of charge. In order to ensure that the requirements on market data deliver against their objectives, ESMA’s guidelines set out further expectations on how market data providers should comply with the provisions on market data.
In particular, the guidelines elaborate on the requirement to provide market data on the basis of cost, on the requirement to ensure non-discriminatory access to data, on the disclosure obligations and on the requirement to provide delayed data free of charge.
While the legal requirements provide for the same approach for trading venues (regulated markets, MTFs, OTFs), APAs, CTPs and SIs, it is important to highlight that the scope of the market data requirements is different for these four types of entities.
For instance, trading venues have to provide pre- and post-trade market data on an RCB, whereas the RCB requirements for SIs are limited to pre-trade market data and for APAs and CTPs to post-trade market data. Furthermore, SIs are not subject to the requirements on delayed data. In consequence, not all requirements apply to all entities to the same extent. Where relevant, this is highlighted in the guidelines.
ESMA noted that it acknowledges that it is important to take the different nature, scale and complexity of market data providers into account when specifying the expectations on the market data provisions, and has taken proportionality into account. For example, considering the different operating models and cost structures of market data providers these guidelines do not harmonize the cost accounting methods but rather require market data providers to have a clear and documented methodology for setting the price of market data.
Similarly, to avoid that market data providers operating continuous auction order book trading systems face a high operational and administrative burden when disclosing delayed pre-trade data, and given the limited added value of users of very granular pre-trade data, these guidelines clarify that for such systems the obligation to provide delayed pre-trade data are met when providing access to the best bid and offer only.