Banks open fixed income front in Europe’s data price battle

The price of bond market data has risen by half over the past five years. This could prompt some users to quit the market and damage liquidity. Big banks and asset managers already say that data on share trades is too expensive. A complaint rejected by exchanges and the Association for Financial Markets in Europe (AFME) is now also targeting fixed income data costs.

The European Union, keen to deepen its capital market after the departure of Britain from the bloc, has proposed a consolidated tape. This collates and gives access to real time bond and stock trades to increase liquidity and transparency. Britain has also floated a bond tape plan. AFME Chief Executive Adam Farkas said in a statement that a tape itself will not solve the fundamental issues of data costs.

Farkas said that if left unaddressed, some market participants might be forced to scale back their data purchases to a minimum. In some cases, it could also lead to strategic decisions to withdraw from certain markets. The AFME commissioned a report from Expand Research on data prices in fixed income. This is by using information from 10 big market makers. Costs have risen regardless of the number of market users and is driven by price hikes and changes to charging structures. The cost of fixed income data, used by market participants to find the best deals across the market for customers, has gone up faster than for equities data.

Banking sector complaints about share price data have focused on exchanges. But the AFME report said that fixed income relies more heavily on non-exchange pricing data from terminals, and research and analytics. AFME said that it wanted standardised pricing models for buying data, uniform storage formats, and consistent procedures for accessing data.