By Huw Jones
LONDON -Britain signalled a shake-up in the availability and price of financial market data on Tuesday due to concerns over “limited competition” for benchmarks, indices and credit ratings.
It is the latest move by Britain to ensure the City of London remains globally competitive after being largely cut off from the European Union since the Brexit transition period ended a year ago.
The Financial Conduct Authority said a first study, which will start this summer, will look into concerns that complex contracts for benchmarks and indices prevent switching to cheaper, better quality and more innovative alternative providers.
Benchmarks like the FTSE 100 blue chip index are widely used by asset managers and banks to track and compare valuations of assets like shares and bonds.
“By the end of the year, the FCA will launch a second market study to assess whether high charges for access to credit ratings data is adding costs to investors and limiting new market entrants,” the FCA said.
The sector is dominated by Moody’s, Fitch and S&P, whose ratings are used by investors to assess the riskiness of a company they are thinking of investing in.
The FCA said it will also begin gathering further information on competition in the market for wholesale trading data.
Such data is used by asset managers and banks to find the best price and liquidity in a stock or bond, critical in ensuring that end investors like pension funds are getting the best deals across a range of stock exchanges and other trading platforms.
“Concerns have been raised that limited competition may increase costs and have an impact on the types of assets that investment managers buy and sell,” the FCA said.