BATS Chi-X Europe Sets the Stage for Market Data Fee Battle
Multilateral trading facility BATS Chi-X Europe wants to set the benchmark for what financial firms pay for European market data.
It has just laid claim to being the first multilateral trading facility to charge for its data -- a move which the MTF believes could help efforts to establish a pan-European post trade consolidated tape by forcing down exchange data fees. Plans to do so have been hindered by the high cost of market data, says BATS Chi-X Europe, which accounts for about one quarter of pan-European equities trading.
In unveiling its new prices, effective October 1, BATS Chi-X Europe says it will be charging one-tenth of the aggregated fees charged by all of the major domestic markets it covers.
BATS Chi-X Europe's market data pricing is based on data usage type and tiered end user fees. Participants receiving the data directly from BATS Chi-X Europe and accessing it through their own and data vendor terminals will be charged only once.
So far, BATS Chi-X Europe has differed from traditional exchanges in giving away its trading data for free while it established itself on the continent. But as of October 1, BATS Chi-X Europe will charge firms 15,000 British pound sterling annually to receive Level One data in real-time and 30,000 British pound sterling annually to receive Level Two data in real-time. There will also be separate monthly display fees depending on the number of end users at each firm. The monthly fee will come to 50 British pound sterling per person for Level One data for up to five users and 125 British pound sterling per person for Level Two data for up to five users. For firms with over 201 users the fee will come to 4,000 British pound sterling for each user for Level One data and 8,000 British pound sterling for Level Two data. Level One data includes best bid and ask prices, order volumes and the last traded prices with respective volumes. Level Two data includes all available real-time bid and ask prices with respective volumes and the last traded prices with respective volumes.
Revenues from fees for data distribution have helped bolster the bottom lines of the London Stock Exchange Group; Deutsche Borse and Nasdaq OMX as demand increases from heavy users such as high-frequency traders. However, there are still plenty of complaints that costs are too high. Europe's introduction of the Markets in Financial Instruments Directive did bring competition to equities trading with the launch of multilateral trading facilities, or alternative platforms such as BATS Chi-X Europe but failed to have much impact on market data prices because exchanges are the only providers of their own trading data.
Written by Chris Kentouris, Editor-in-chief (Chris can be contacted through Chris.Kentouris@hotmail.com)