Memo #
33035

ESMA Consultation on MiFID II/R Market Data Obligations: ICI Global Comment Letter
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[33035]

January 12, 2021 TO: Derivatives Markets Advisory Committee
Equity Markets Advisory Committee
Fixed-Income Advisory Committee
ICI Global Regulated Funds Committee
ICI Global Trading & Markets Committee RE: ESMA Consultation on MiFID II/R Market Data Obligations: ICI Global Comment Letter

 

As previously advised,[1] the European Securities and Markets Authority (ESMA) published a consultation paper (CP) on draft guidelines for the market data obligations under MiFID II/MiFIR. Attached is ICI Global’s response to the CP. The response takes account of input received on the draft response.[2]

In our response, we set out our broad support for ESMA’s proposed guidelines and recommend the following enhancements:

  • Accounting methodologies for setting market data prices – market data providers (MDPs) should: publish their current accounting methodology; give customers advanced notice of changes, including impacts on market data prices; and indicate where they have published their methodology (e.g., on a common location on MDP’s website). 
  • Audit practices – MDPs should limit audit practices to only those necessary to confirm customers’ compliance with market data agreements (MDAs) and clearly set out how customers can positively demonstrate compliance with the MDA. 
  • Customer categorisation – MDPs should publish easily accessible and verifiable criteria and information on their customer categories and enable corporate groups, which include regulated fund managers, to select whether they are placed into a customer category based on the group’s use of data or the use made by a group subsidiary. 
  • Non-discriminatory access – MDPs should ensure that terms and conditions and technical arrangements for data access are applied in a non-discriminatory manner for corporate groups, subsidiary and stand-alone customers. 
  • Per user basis charging – MDPs should charge for display data on a per user basis – only requiring customers to meet bare minimum qualifying conditions for such a model – or MDPs should publicly justify why they are unable to offer a per user fee model. 
  • Unbundled data – MDPs should disclose the bundled price of all the MDP’s products and services (and a sub-set, if applicable) alongside the price for each item of unbundled data. 
  • Reasonable Commercial Basis (RCB) Information – ESMA should enhance its proposed template of RCB information, require MDPs to highlight where their RCB information has been published (e.g., a common location on the MDPs’ website) and explore the merits of developing a database of MDP’s RCB information, including analytical tools to support easy customer access to and side-by-side MDP comparison. 
  • Additional guidance – to enable customers more easily compare approaches across MDPs, ESMA should: explore the merits of providing additional guidance and/or Q&A to further explain and harmonise MDP’s cost typologies; terms and conditions and technical arrangements for data access (e.g., latency and connectivity options); and MDP’s approaches to presenting accounting methodologies. 

We support ESMA’s efforts to improve the MiFID II/MiFIR market data framework. Ultimately, we consider that a comprehensive, thoughtfully implemented consolidated tape (CT) with fair pricing (i.e., transparent, cost-plus margin basis), high data quality, timely coverage and delivery, and appropriate governance will provide the greatest enhancement to market transparency. We encourage policymakers, including ESMA, to prioritise changes to MiFID II/MiFIR to support the delivery of a CT. 

Next Steps

ESMA expects to publish a final report and final guidelines by Q2 2021.

 

Giles Swan
Director of Global Funds Policy
ICI Global

 

Attachment

endnotes

[1] See ICI Memorandum No. 32973, RE: ESMA Consultation on MiFID II/R Market Data Obligation, dated 10 December 2020, available from https://www.iciglobal.org/iciglobal/pubs/memos/ci.memo32973.global

[2] See ICI Memorandum No. 33033, RE: ESMA Consultation on MiFID II/R Market Data Obligations: Draft Comment Letter for Member Comment by 6 January 2021, available from https://www.iciglobal.org/iciglobal/pubs/memos/ci.memo33003.global