17.III.3.3 Charge on a per-user basis

The discussion above has so far examined the price level of data charges. MiFID II also considers another aspect to play a significant role in the equity pre- and post-trade data prices, applying regardless of the price levels charged. In practice, equity pre- and post-trade is not always supplied directly from the source (e.g. an RM) to the final user of the data (end-user). Instead, equity pre- and post-trade data is very often purchased through data vendors.1 Under MiFID I, in most cases end-users of data were charged based on the number of devices receiving data. As a consequence, an end-user receiving the data from, for instance, an RM through different channels (data vendors and/or independent software vendors) could turn out to pay for the same data several times.2MiFID II aims to fix this situation by providing rules to charge data on a so-called ‘per-user pricing model of market data’.

MiFID II requires MiFID II Data Suppliers to charge data prices according to the use made by the individual end-users of the market data (‘per user basis’). MiFID II Data Suppliers (e.g. RMs or APAs) need to put arrangements in place to ensure that each individual use of market data is charged only once.3 By way of exception, MiFID II Data Suppliers may decide not to make MiFID II equity pre- and post-trade data available on a per user basis where charging on a per user basis is ‘disproportionate to the cost of making that data available, having regard to the scale and scope of the data’.4MiFID II Data Suppliers need to provide grounds for the refusal to make market data available on a per user basis and shall publish those grounds on their webpage.5

The MiFID II-rules reflect the aim to find a balance between (a) lower data prices compared to MiFID I; and (b) proportionate administrative costs for MiFID II Data Suppliers, in particular RMs and MTFs. On the one hand, the MiFID II intends to lower data prices by requiring market data to be sold on a per user basis. On the other hand, MiFID II permits an exception to this rule where it would be ‘disproportionate’ to the cost of making that data available. Under MiFID I RMs and MTFs relied to a large extent on a few data vendors to bill and collect the fees of their end clients. 6 Therefore, without the MiFID II-exception, the new per user-model would force RMs and MTFs to establish and maintain a direct relationship with each end-user willing to benefit from the model, increasing administrative costs for RMs and MTFs.7 These administrative costs could in theory be passed onto end-users, since MiFID II desires the price levels of market data to be priced based on the costs of market data production and dissemination (see paragraph 3.1 above). This is the reason why MiFID II provides an exception to the per-user model (‘disproportionate in respect of the scale and scope of the market data provided’).8