United Kingdom: Closed consultation on the results of the FCA wholesale data market study

On 12 April 2024, the UK Financial Conduct Authority (FCA) closed its consultation on the report on the results of its wholesale data market inquiry, which aims to investigate whether the markets for benchmarks, credit rating data and market data vendor services function effectively. The study found that in credit ratings data, the market is highly concentrated among three major firms that have high profits, with barriers for smaller challenger firms to compete. In benchmarks, the report finds strong network effects, which means the market often tips to one dominant provider becoming the industry standard, creating market power for established firms who can charge higher prices due to opaque licensing practices. For market data vendors (MDVs), there is a high level of concentration, but users do have choices, and there is some switching between vendors. However, some users find it difficult to switch due to a lack of alternatives with equivalent data coverage. MDVs' pricing practices, such as bundling and complex licensing, can increase costs for some users. Overall, the report finds evidence of market power in wholesale data markets, leading to limited competition and higher costs for some data users. However, data costs are a small part of total costs for most firms. The impact on end investors is likely modest, given the size of data costs relative to overall costs.