A new study reveals that market data prices are rising faster than ever

Recently, Substantive Research conducted the results of a study that found that market data prices are on a sharp rise.

In fact, the report suggests that the prices are rising faster than ever before, despite an ongoing review by the UK’s financial regulator, the Financial Conduct Authority (FCA), into competitive market prices.

Substantive Research conducts market data price analysis of its own

The FCA published its update on the Wholesale Market Data Study around two months ago, in August 2023. According to the update, the regulator intends to publish its findings in March 2024.

The FCA also added that it is focusing on concerns that competition may not be working well, adding that its study will assess the reality of risks of “bundling of core services with other data services, making it difficult for users to switch; restrictive terms around data usage; high barriers to market entry; high charges for users when renewing their contracts; and, a low level of meaningful innovation in the market.”

However, Substantive Research developed an interest in the topic as well, so it conducted its own analysis of 2023 market data pricing. The results have revealed that the prices are skyrocketing faster than ever. The company also reported an inconsistency of charges for identical products and use cases. More than that, the inconsistency is on the rise as well, while agreements remain opaque.

According to the analysis, anyone who was renewing market data contract agreements throughout this year has received extremely comprehensive and aggressive repricing.

Substantive Research’s findings

Rating agencies have seen an average price increase for the unchanged customer use case of 12%, which does not include YoY inflation boost that affects multi-year contracts. Index providers have seen a similar average price increase for unchanged customer use case of 13%, which also doesn’t include inflation increases. Furthermore, numerous outlier providers have repriced their clients by as much as 600% in some cases.

Substantive Research also reported that some consumers are forced to pay an amount that is up to 26 times higher than the amount that others have paid for specific products and similar requirements.

The report even included multi-year agreements signed last year, in 2022, which saw the average annual inflation increase of 5% for every year covered by the agreement. However, when it comes to consumers signing multi-year agreements in 2023, the rate has increased from 5% to 8%.

Commenting on the findings, Substantive Research’s CEO, Mike Carrodus, said that data consumers looking to understand the new pricing models are presented with even more challenges, as market data providers and vendors are also introducing material changes into their current price structures.

“These include increased bundling of products, when consumers may only wish to buy and pay for a specific product inside that bundle, and changes in primary pricing mechanisms, making it even more difficult for consumers to compare costs against previous agreements,” he added.