17.III.3.6 Disclose pricing of market data (transparent commercial terms)

The final species of the genus ‘reasonable commercial basis’ is that MiFID II Data Suppliers (RMs, MTFs, SIs, APAs, and CTPs) need to disclose the price levels of MiFID II equity pre- and post-trade data. MiFID II relies on the comparability of price levels across MiFID II Data Suppliers to correct potentially ‘unreasonable’ prices.1 To ensure prices can be compared, MiFID II requires the price levels of equity pre- and post-trade data to be disclosed (made transparent) to the broad public, being investors and NCAs.2 In brief, MiFID II Data Suppliers need to disclose the following information: (a) current price lists; (b) advance disclosure with a minimum of 90 days’ notice of future price changes; (c) information on the content of the market data; (d) revenue obtained from making market data available and the proportion of that revenue compared to the total revenue of the MiFID II Data Supplier; and (e) information on how the price was set, including the cost accounting methodologies, as well as the specific principles according to which direct and variable joint costs are allocated and fixed joint costs are apportioned between the production and publication of market data and other services provided by the MiFID II Data Supplier.3

The disclosure obligations (transparent commercial terms) of MiFID II reflect a balance between the interests of MiFID II Data Suppliers versus data users. On the one hand, MiFID II requires MiFID II Data Suppliers to disclose the information under points (a-e) to all data users (the public), rather than only to NCAs.4 This is beneficial for data users, since now not only NCAs can supervise the rules. Instead, MiFID II also enables data customers to pursue their rights to obtain data on a reasonable commercial basis, for example through discussing the prices directly with the MIFID II Data Supplier, complaining to the MiFID II Data Supplier’s NCA, or by litigating (taking the case to court).5 On the other hand, MiFID II Data Suppliers are not required to disclose their actual costs of production and dissemination. MiFID II only requires the disclosure of fees, content, and cost accounting methodologies (see points a-e).6 The aim here is to protect MiFID II Data Suppliers. The idea is that disclosing the actual costs would put MiFID II Data Suppliers at a competitive disadvantage, since this constitutes commercially sensitive information.7 In addition, regulation on how exactly costs need to be apportioned and calculated are difficult to provide, given the different business and accounting structures of different MiFID II Data Suppliers. Transparency on the actual costs also increase compliance costs in data supply.8 Hence, MiFID II requires the disclosure of fees, content, and accounting methodologies only.