17.V.5 Concluding remarks

The three aspects of the ESMA Review, being (1) data disaggregation, (2) data on a reasonable commercial basis, and (3) free of charge data 15 minutes after publication, show that ESMA believes that so far MiFID II has not delivered on its objective to reduce market data prices. ESMA observes that data prices increased, in particular for data for which there is high demand (e.g. non-display data). ESMA believes that the value of the data for users is one of the key drivers for setting the price for market data (rather than merely the costs of data production and dissemination). At the same time, ESMA recognises that market data plays an increasingly important role on the financial markets and that market participants are consuming an increased amount/variety of data. ESMA also acknowledges that the increased demand for data requires innovations and accordingly higher data production and dissemination costs.1

The ESMA MiFID II Review suits well with the overall trend in EU equity pre- and post-trade transparency regulation, that is – the ESMA proposals are top-down in nature. First, ESMA proposes a shift from a principle-based to a rule-based approach (e.g. harmonised market data policies, including similar definitions, and specifications for the requirement to make data available free of charge 15 minutes after publication). The rule-based recommendations would leave less flexibility for MiFID II Data Suppliers (RMs, MTFs, SIs, APAs (and CTPs if authorized)). Second, ESMA suggests the Commission to assess the MiFID II scope. MiFID II currently excludes data vendors (i.e. non RMs, MTFs, SIs, APAs or CTPs). ESMA observes – in line with the view of RMs, MTFs, APAs, and data users (including SIs) – that such data vendors play an important role in the chain of financial market data. Third, ESMA emphasizes the importance of enforcement of the rules. A main aspect of the ESMA review is that the MiFID II rules for equity pre- and post-trade data prices could benefit from stricter enforcement. The enforcement proposal of ESMA relates to the rule-based ESMA recommendations, the latter intending more clarity as to what is permitted under MiFID II.

ESMA does not suggest an entirely top-down approach. ESMA does, for example, at the moment not propose price controls. Price controls require data prices and data policies to be checked in advance by ESMA and/or NCAs. Neither does ESMA recommend actual price regulation, such as the so-called LRIC+model or revenue caps.2 ESMA instead intends to achieve the MiFID II objectives of reduced market data prices through enhancing the current so-called transparency plus approach (without prejudice of introducing price controls and/or price regulation in the future if the enhanced approach does not work). As a final example, ESMA does not suggest competition authorities to check whether the data prices and policies are in accordance competition law.3 Instead, ESMA suggests focusing on enforcement via rules based-provisions, as supervised by NCAs and/or ESMA. The Commission has asked for stakeholder input to verify the ESMA observations and whether or not there is agreement with the ESMA proposals.4