5/2/2025
ASKED
Financial Market Data
Massive price increases burden fund industry and investors
Interview with Thomas Richter, CEO of the German Investment Funds Association BVI
The expenses of asset managers for financial market data, such as stock prices and indices, have massively increased in recent years, reaching nearly USD 50 billion worldwide in 2024. These costs significantly burden the industry, and ultimately, the fund savers bear the cost increases. In this interview, you will learn about the causes of this development, the role of European stock exchanges according to a recent study by Market Structure Partners, and how the price spiral can be stopped.
Mr. Richter, the expenses for financial market data have been rising for years. What are the reasons for this development?
The price increases are massive. The reasons are the oligopolies of stock exchanges and rating agencies, as well as the market dominance of major index and data providers. At the same time, fund companies are legally required to use stock prices, benchmarks, ratings, and other data from third-party providers. Market data is indispensable because it is a prerequisite for providing services along the entire value chain in asset management, from research to trading, clearing, settlement, compliance, and risk management, but also in sales or reporting. This gives data providers market power and leads to partially exploding prices. In addition, there is a de facto obligation to subscribe for increasingly complex data licenses that cover any use and dissemination of data in the asset management value chain right through the customer.
What are the impacts of rising costs?
They reduce fund returns. Ultimately, the fund savers bear the price increases for market data.
A recent study by the London strategy consultancy Market Structure Partners has questioned the pricing behaviour of European stock exchanges in their data business. What are the findings?
The study shows that European stock exchanges are apparently compensating for their declining revenues in the trading business with price increases. However, these price increases lack any factual basis. There are no specific costs for producing market data and the costs of running a trading platform are stable or declining. The study illustrates how extreme the cost increase is, for example, for asset managers: In certain cases, the automated use of market data in 2024 was up to 97 times more expensive for users than the use of the same data by a human worker in 2017.
What needs to happen?
The oligopolies and the behaviour of data providers are a case for competition law authorities. Politicians are now taking note of the powerlessness of individual users against the dominant data platforms. We are calling for an EU Data Vendor Act to regulate the commercial behaviour of these companies. Because if we don’t, the already considerable cost pressure in the fund industry will intensify further – also to the disadvantage of investors.
The path to an EU law is likely to be long. What are you doing in the meantime to stop the massive price increases?
As part of the BVI Financial Market Initiative, we are calling for the cost-effective and simple procurement of stock market prices, index, rating, and ESG data that fund companies particularly need. The initiative primarily covers regulatory issues. For example, we have successfully advocated for the introduction of tickers for equities and bonds, which will ensure transparency and comparability of stock market prices. We are also calling for provisions in the Benchmark Regulation and the Credit Rating Agencies Regulation that provide better protection for data users. Together with the French fund association AFG and the Paris Europlace association, we are also calling for a harmonised regulation of fees and licence conditions for all data providers operating in the EU. Together with other European associations, we have filed a competition complaint against CUSIP Global Service, the authority that issues U.S. securities identification numbers. It is intended to prevent data monopolists from abusing their market power. We are also in favour of setting standards to expand the low-cost data offering for fund companies, and thus reduce the cost burden. Moreover, we are engaging with data providers to promote low-cost, preferably license-free, high-quality data products and services.
Questions by Christiane Lang, Internet Editorial Team.