The opening up of the market for equity market data, as foreseen in the MiFID, raises the question of whether data will be sufficiently consolidated and of high enough quality, or whether the information will become too fragmented, thereby hindering price transparency and the implementation of best execution policies. This chapter outlines the market for financial market data, the provisions of MiFID and the implementing measures regarding financial data and data consolidation. It also looks at the approaches taken by Committee of European Securities Regulators, the FSA and the US authorities. It concludes that markets should be capable of adapting and that additional licensing requirements, such as those proposed by the FSA, are in fact premature and might act as a barrier to the single market. Nor does it find that a US-style monopoly consolidator would be needed.

Introduction

One aspect of the MiFID that is rarely discussed is its impact on the financial market data business. MiFID not only abolishes the concentration rule for trading of equity securities, but also for market data generated from these trades. Whereas today market data on equity transactions is primarily controlled by the exchanges, MiFID leaves open how and by whom this information will be consolidated in the future. It says only that it should be done on a reasonable commercial basis, and as close to real time as possible.