FMLS:2023 exclusive: Cboe’s Richard Barden on market data as European retail brokers go B2B

Rick Steves

At FMLS:2023, Richard Barden highlighted the cost implications of non-compliance in market data, the growing interest in European options amid a saturated FX space, and brokers’ expansion into B2B territory.

FMLS2023: FinanceFeeds interviews

In the heart of London’s financial district, the Finance Magnates London Summit 2023 (FMLS:2023) culminated its prestigious proceedings, a beacon for fintech, online trading, and crypto luminaries. Amid this confluence of innovation and expertise, FinanceFeeds’ Editor-in-Chief, Nikolai Isayev, engaged in a riveting dialogue with Richard Barden, a Director for Market Data sales at Cboe Global Markets.

Barden, an experienced hand in market data with a rich history at Morningstar and Thomson Financial, sells Cboe’s data offerings across Europe and the Middle East. Cboe itself, now one of the leading global exchange operators, operates a vast array of markets from North America to Europe and Asia Pacific, covering equities, derivatives, FX and digital assets. Its breadth in the global market is a testament to its strategic acumen.

Non-compliance with proper data license doesn’t come cheap

In his conversation with Isayev, Barden delved into the nuances of market data costs. He expressed, “There is definitely a perception… that market data is expensive,” underscoring the higher costs of non-compliance and stressing the significance of proper data licensing. “Nowadays, it might be more expensive not to have the right sources or provenance for your data and not to have the compliance oversight as to where your data comes from, to make sure that it’s licensed properly.”

On the impending regulatory shifts in 2024, Barden reflected on their potential to reshape the derivatives market in particular. He foresees a surge in pan-European derivatives trading driven in part by by Cboe’s equity derivatives exchange, Cboe Europe Derivatives (CEDX), which recently expanded into single stock options

“European options have been static for the last decade, whereas you’ve seen almost exponential growth in terms of US options trading. CEDX is trying to reverse that trend […]and we hope it will be one of the vehicles that will drive greater trading volumes in European derivatives over the coming years.”

As to the administrative side of things, Barden noted that several firms at FMLS:2023 will not directly license Cboe’s market data to, for example, create equity CFDs. Instead, they will get that data from another broker. Then, they simply report their usage to the broker which has a license with Cboe and does all the reporting. “So that’s a very easy way for a firm to use properly licensed data with almost zero admin overhead.”

If we’re leaving costs aside, there are two or three routes that firms can use to help make this process much easier than they probably anticipate, Barden noted as he pointed to Cboe’s work with consultancy firms. “Their job is to make sure that firms are properly licensed for their data requirements, but also to help them with the reporting and all the associated admin that goes with that.”

A saturated FX space gives rise to options trading

Looking ahead to 2024, Barden forecasts a shift in the brokerage landscape, with retail brokers expanding into B2B services and a growing interest in options trading in Europe.

“We see a continuation of retail brokers, who have traditionally been B2C, expanding into B2B. So, these are firms who are setting up sort of prime arms and are targeting a wholesale clientele. And as part of that product offering, they want to offer equities, and they offer those through API’s. So we see that continuing, we’re having conversations with various firms here, specifically about them creating this second string to their data licensing arm.

Richard Barden, Director for Market Data sales at Cboe Global Markets
Richard Barden, Director for Market Data sales at Cboe Global Markets

“The other interesting trend is that we’ve seen firms wanting to talk to us about offering options for trading to retail clients […] I feel that maybe the FX brokerage space is now very, very saturated and it’s difficult to see how they can create some form of an advantage there. They obviously do see options trading as a currency that’s increasingly of interest to retail traders here in Europe because they look at what’s happening in the US. They think ‘How can I get some of that action here?’ The other thing is maybe one or two of the more farsighted firms are thinking that this might be a good regulatory hedge should ESMA review leverage restrictions again at some point in the not-too-distant future. If that were to happen, it might make trading equity CFDs, or other products, slightly more problematic and promote exchange-traded derivatives, such as those offered by CEDX. Maybe then, they might look to options as a listed product that makes it easier for them. So I expect to see a continued interest in European options trading in 2024.”

Barden’s insights into client engagement trends, the cost implications of data licensing, and the criticality of sourcing compliant data painted a vivid portrait of the industry’s trajectory. The interview, set against the backdrop of FMLS:2023, highlighted the summit’s role as a crucible of financial thought leadership and underscored Cboe’s strategic positioning in the global trading market.

  • Read this next

    Institutional FX

    Cboe to launch MSCI-based options and volatility indices

    “We are excited to expand our Cboe-MSCI toolkit with additional index options and volatility indices – an enhancement that will not only broaden our customers’ product choice, but also enrich the ways they interact with and analyze the global markets.”

    Fintech

    Traxys taps Quantifi for risk management in commodities trading

    “We wanted to take a more sophisticated approach to risk management and have a consolidated view of risk exposures across our global operating model. Quantifi was our preferred choice as it has a track record of success in the commodities markets.”

    Digital Assets

    Startale Labs Secures Funding for Web3 Expansion

    Startale Labs, a leader in Japan’s Web3 development, including Astar Network and Startale Web3 Cloud, has raised an additional $3.5m from UOB Venture Management and Samsung Next. This seed extension round boosts their total seed funding to $7m, following a $3.5m investment from Sony Network Communications in June 2023.

    Retail FX

    XS.com acquires South African broker Ubutyebi Financial Services

    XS.com, the multi-regulated financial services provider, has made a strategic move to expand its presence in Africa by acquiring Ubutyebi Financial Services, a licensed Financial Service Provider (FSP) in South Africa regulated by the Financial Sector Conduct Authority (FSCA).

    Digital Assets

    Hong Kong advances legislation on stablecoins and crypto trading

    Hong Kong is moving forward with legislation to regulate stablecoins and crypto over-the-counter (OTC) trading in the latest effort to develop a legal framework to service the city’s digital-asset industry.

    Digital Assets

    Do Kwon to be extradited to US as South Korea request overturned

    Terraform Labs co-founder Do Kwon is set to be extradited to the United States to face fraud charges related to massive losses suffered by U.S. investors due to its algorithmic stablecoin collapse.

    Retail FX

    Prop firm Instant Funding pauses US accounts, citing ThinkMarkets ban

    Proprietary trading firm Instant Funding has become the latest retail platform to halt onboarding new US clients, citing a recent decision by their partner broker, ThinkMarkets.

    Retail FX

    Funded Trader and Alpha Capital switch to cTrader, Lark Funding to DXTrade

    Proprietary trading firms Lark Funding and Alpha Capital have both announced changes to their operations that mainly affect their business with US clients.

    Fintech

    Top 5 Most Reliable KYC Technology Providers

    The financial sector’s trade evolution has led to the emergence of several financial markets that provide excellent opportunities for wealth creation. However, it has also given rise to many fraudulent organisations that attempt to steal money from traders. KYC providers developed and offered KYC technology to combat criminal activity in the field of trading and investing.

    <