Vast pricing inconsistencies on index, ratings, and ESG market data, study finds

Rick Steves

“This enlarged dataset has shown that pricing inconsistencies are not only widespread, but that there are even larger disparities out there in terms of what firms are paying the same vendors for similar market data products.”

A study by Substantive Research, covering 60 of the largest asset management firms, with AUM of $7 trillion, has found extreme levels of inconsistency in market data pricing, with some market data consumers paying up to 26 times more than others for comparable use cases.

The report shines a light onto the total lack of transparency around market data pricing and agreement structures. Substantive Research’s Market Data Spend Analytics service allows both buy-side and sell-side firms to truly understand and compare their market data payments and budgeting with the wider market and against their peers.

“We had only seen the tip of the iceberg”

Mike Carrodus, CEO of Substantive Research, said: “When we did the initial study in 2022 we were conscious we had a broadly representative survey universe, but were always curious as to how a more comprehensive dataset would influence our core conclusions. As more and more firms joined the project it became clear to us that we had only seen the tip of the iceberg.”

Indeed, the 2022 report revealed that some institutions were paying 13 times more than peers for comparable licenses and products.

Upon publication of that analysis, a large number of new firms joined the survey group, increasing the dataset by 50% and creating a much deeper and more detailed picture of market data pricing.

The new analysis highlighted the following pricing inconsistencies:

In the Index market:

“In our initial study (Oct 2022) the lowest to highest pricing for similar developed market index products showed that some providers were charging certain clients 13 times (1300%) more than other clients for similar products and services;
The updated data (Jan 2023) shows that some providers are charging certain clients more than 26 times (2632%) more than other clients for similar products and services”

In the Ratings market:

“In the October study, the lowest to highest pricing for similar ratings products showed that some providers were charging certain clients over three times more than other clients for similar products and services;
The updated study in Jan 2023 shows that some providers are charging certain clients more than five and a half times more than other clients (562%) for similar products and services”

In the ESG market: 

As to ESG providers, the latest survey shows that some providers are charging certain clients six times more than other clients (600%) for similar products and services – showing that the embedded pricing inconsistencies inherent in the traditional market data industry are being replicated in this fast-growing new area.

FCA to send out a questionnaire for consumers of market data

Krystal Somaza, Head of Data & Analytics at Substantive Research, said: “Since we published our previous findings, we’ve welcomed a great deal more additional data from an enthusiastic market. This enlarged dataset has shown that pricing inconsistencies are not only widespread, but that there are even larger disparities out there in terms of what firms are paying the same vendors for similar market data products.”

Mike Carrodus, CEO of Substantive Research, commented, “As part of its ongoing wholesale data market study, the FCA will shortly be sending out a comprehensive set of questionnaires to industry players to gather more information on the prevailing pricing climate in market data. While we know that the FCA findings will be published within a timeframe of 12 months, our data already offers transparency in this opaque marketplace, where an incumbent vendor base enjoys significant pricing power. Procurers of market data continue to focus on driving value in their budgets and we’re proud that our insights empower them to do just that.”

The FCA is expected to send out a questionnaire for consumers of market data as part of its wholesale data market study. The regulator said it was looking for stakeholder views on “whether we should make a market investigation reference to the Competition and Markets Authority (CMA) about one or more of these markets.”

Substantive Research defended that best practices in negotiation delivers results, although may not drive huge price decreases given the power dynamics in this market. In addition, even with a strong focus on standardisation and consistent pricing, vendors would struggle.

Read this next

Web3

MoonPay onboards Gucci, Puma, and Mastercard to Web3 Tools

Blockchain payments infrastructure firm MoonPay has unveiled a new platform to simplify the Web3 experience for brands and consumers. The platform, dubbed Web3 Tools, helps brands provide a less complex Web3 journey.

blockdag

BlockDAG’s Keynote Video Drives $34.7M in Presales, Gaining Traction Among Solana (SOL) Investors and Litecoin Enthusiasts

Discover BlockDAG’s leadership in cryptocurrency, attracting Solana (SOL) investors and Litecoin enthusiasts with its strong growth prospects and groundbreaking mining technology. 

Digital Assets

Mt. Gox users alarmed by $10 billion transfer to unknown wallet

Mt. Gox has transferred 42,830 BTC, worth about $2.9 billion, from its cold wallets, according to Arkham Intelligence data. This marks the first major transfer from the defunct bitcoin exchange in five years.

Digital Assets

FTX co-CEO, SBF’s close associate sentenced to 90 months in prison

Former FTX executive Ryan Salame has been sentenced to 90 months in prison after pleading guilty to criminal charges last September.

blockdag

BlockDAG Dominates Crypto Presales With $34.7M Milestone, Surpassing Floki And Bonk In Market Influence

Discover how BlockDAG’s cutting-edge dashboard and presale achievements upstage Floki and Bonk in the cryptocurrency arena, signaling superior investment opportunities.

Market News, Tech and Fundamental, Technical Analysis

Dogecoin Technical Analysis Report 28 May, 2024

Dogecoin cryptocurrency can be expected to fall further toward the next support level 0.1500.

Retail FX

Canadian broker Questrade taps TradingView charting

Canadian securities brokerage Questrade has upgraded its web platform by integrating popular charting software TradingView.

Fintech

Germany lifts N26’s monthly cap of 60,000 new clients

Germany’s financial regulator has lifted a cap on the number of new clients that N26 Bank AG can take on after the fintech company improved its anti-money laundering controls. BaFin, the country’s financial watchdog, will remove the cap entirely from June 1, 2024.

Education

Animals and the money: Octa broker gathered the most popular slang words in financial markets

If you’ve seen ‘The Wolf of Wall Street’ with Leonardo DiCaprio as Jordan Belfort, you might have wondered why he’s called a wolf in the movie. It’s not just a random label. Animals are often used in finance to describe traders, their traits, or market conditions.

<