17.III.4.1 Level 1: a tighter regime for a reasonable commercial basis

During the MiFID I-Review some market participants argued that European market data prices, especially of in the area of post-trade data, were too high. These market participants referred to the lower data prices in the United States (US).1 Not all market participants agreed with this observation. It was claimed that the comparison with the US did not take into account the EU-US scale difference, emphasizing that EU prices were higher due to the smaller scale apparent in the EU.2 The view of both CESR and the Commission were closest aligned to the first perspective. CESR and the Commission observed that there were substantial differences between the data prices of the EU and the US, especially in the area of post-trade data.3 Accordingly, CESR and the Commission deemed intervention necessary (top-down).

The next step was to determine to the degree of regulatory intervention. CESR did not recommend intervention through a clarification of the meaning of a reasonable commercial basis. CESR only recommended intervention through (a) unbundled pre- and post-trade data; and (b) free data 15 minutes after publication.4 While the Commission accepted these recommendations, the Commission took it one step further. The Commission also proposed regulatory intervention through (c) specifying what constitutes a reasonable commercial basis.5 The Commission’s Impact Assessment examined the pros and cons of providing a specification of a reasonable commercial basis. The Commission considered the difficulty in setting price levels to be the main drawback.6 The Commission also acknowledged that its proposal would interfere with free competition and would result in less revenue for the sale of market data.7 However, the Commission believed that the potential advantages, such as lower data costs, more transparent markets and better informed investors,8 outweighed the drawbacks. In line with the foregoing, the Commission proposed to clarify the meaning of a reasonable commercial basis. The Commission proposed to do so through regulatory technical standards.9 As reflected in the final MiFID II-text, both the European Parliament and Council adopted the Commission’s proposal.10