FCA decides not to intervene with wholesale data market for fear of unintended consequences

The Financial Conduct Authority (FCA), UK’s financial regulator, recently published the final report regarding the wholesale data market. The regulator noted that it found room for improvement during its investigation of the market conditions.

However, ultimately, the FCA decided to rule out the intervention, fearing that it might cause unintended consequences which may make matters worse for the market participants.

There is room for improvement, but the FCA rules out major intervention

The FCA conducted an extensive examination of the wholesale data market, especially focusing on the competition in the market for benchmarks, credit rating data, and market data vendor services. The results of its examination revealed that it could intervene and potentially help improve it.

However, this could potentially impact things like the quality and availability of data. Given that this is a market that investors from all over the world rely on, compromising or disrupting it in any negative way could have major consequences.

Even so, the decision was not obvious even to the regulator, as all three markets seem to have areas where competition does not work well. The FCA has found that in some cases, users end up paying higher prices for the data they buy, compared to what they would be paying if competition worked more effectively.

Keeping all of this in mind, the FCA said that it has decided against wholesale enforcement. Instead, it will take forward ideas to help support the availability of wholesale data. The goal is to ensure that it is available on reasonable, fair, and transparent terms. This comes as part of the regulator’s efforts to “repeal and replace” assimilated EU laws.

The final report is in line with last August’s initial findings

The FCA’s executive director of consumers and competition, Sheldon Mills, stated that the market study found that companies can access the data they need in order to make effective investment decisions. However, he added that the FCA can avoid an intervention, as the situation is not drastic enough to demand it.

Mills concluded by saying: “However, we will examine ways to help support wholesale data being provided on fair, reasonable, and transparent terms.”

It is also worth noting that the final report is in line with the FCA’s initial findings published in August 2023. At the time, the regulator said that it plans to review the rules, but changes might not come for a number of years, given the market’s international nature, which will require delicate work in order to change it without causing major disruptions.