Research by Market Structure Partners (MSP) has claimed that European stock exchanges are increasingly turning to market data sales to compensate for adverse market conditions that should have resulted in a downturn in equity market revenues such as declining equity trading volumes, shrinking market share, and a diminishing customer base. This shift has dramatically driven up the cost of equity market data, which is essential for issuers, investors, and market intermediaries to conduct their daily business.

The research, commissioned by a coalition of trade and other industry associations, presents a critical analysis of how the equity market data business and fee structures of Europe’s largest exchanges (Deutsche Börse, Euronext, LSEG, Nasdaq Nordics and SIX Swiss Exchange Ltd) have evolved and how it stifles growth and innovation.

Niki Beattie, CEO of MSP said “This Study shows the ease with which exchanges can rely on market data income to supplement what should otherwise be a natural decline in total revenue earnt from equity markets and suggests that, as a result, market growth has become a secondary objective. European policymakers with competitiveness and innovation agendas should rigorously challenge the current separation of trading and data revenues at all trading venues.”

However, the report has proven controversial, with LSEG objecting to its findings.

“The data presented in the report contains multiple errors and does not accurately present Turquoise’s trading volumes and market data costs,” said an LSEG spokesperson. “As just one example, the report says that ‘LSEG’ has increased its data fees for private investors by over 150% between 2017-2024. However, market data for retail investors on Turquoise has always been free and there was no change in the LSE data charge for this community over this period. Since January 2025, LSE fees for market data for retail have also been waived. Furthermore, all of LSEG’s equity trading entities are required to make Reasonable Commercial Basis disclosures. The conclusions drawn in the report are therefore inaccurate and we will be contacting MSP to request the necessary extensive corrections throughout.”

Total equity market revenues consist of trading revenue and market data revenue combined. However, the report claims that market data pricing does not appear to align with the trading activity it underpins.

EU regulatory disclosures from Europe’s largest exchanges suggest that they appear able to sustain overall equity market revenues by increasing the portion that they generate from market data as trading revenues decrease. For example, the report says:

• Transacted value on Euronext’s equity markets reduced by 17% between 2020 and 2023. However, the total equity market revenue only declined by 0.5%. This is because market data revenues increased and, as a proportion of overall revenue, rose from 11% to 19%.
• Transacted value on at Deutsche Börse’s equity markets reduced by 29% between 2020 and 2023. However, total equity market revenue only declined 12%. This is because market data revenues increased and, as a proportion of overall revenue, rose from 21% to 31%.
• Transacted value on Nasdaq Nordics’ equity markets reduced by 26.9% between 2021 and 2023. However, the total equity market revenue only declined by 8.8%. This is because market data revenues increased and, as a proportion of overall revenue rose from 19% to 23%.
• LSEG only has to make regulatory disclosures for its EU subsidiary, Turquoise. Trading turnover on Turquoise reduced by 61% between 2020 and 2022. Nevertheless, during the same period, market data revenues increased and, as a proportion of overall equity revenue, rose from 10.5% to 27%.

According to MSP, these increases in market data revenue have occurred even though there are no specific costs for producing market data and the costs of running a trading platform, such as software, hardware, energy prices and other factors are stable or declining. Additionally, exchanges in the UK and Europe have run the same trading technology for more than a decade and there is no evidence of any significant expenditure in their accounts. Costs for disseminating data across the market are borne by third parties.

The research argues that, exchanges have managed to maintain revenues by charging higher prices to fewer participants for more limited data.

It claims this appears to have been achieved through the introduction of arbitrary and complex fee structures for use of the same data that are based on multiple factors that have a cumulative effect on cost including: data consumption method (human use on display terminals versus machine use of non-display data), user type (broker/agent), competitive status, professional versus retail users, and number of devices that may be able to see the data. Restrictive clauses also limit data use to exchanges’ predefined purposes, making it hard for innovators to use data without taking on indeterminate financial risk.

As a result, every firm and user has a different cost profile and, if an exchange lowers prices for one set of customers, it may offset the revenue loss by raising prices for other customers.

The pricing model has led to extraordinary price increases, particularly as exchanges appear to seek to stem losses that arise that result from their customers’ increasing automation. Most dramatically, under certain conditions, it is now 35 to 97 times more expensive in 2024 for a machine to use data compared to the cost for a human to use the same data for the same activities in 2017.

Additionally, according to the research, firms that compete with traditional stock exchanges, either as trading venues or index providers are amongst those that have seen the most dramatic price increases. Competing trading platforms have seen costs for non-display data rise by up to 481% between 2017 and 2024, while proprietary index creators that compete with exchange owned indices experienced cost rises between 97% and 170% across three exchanges over the same period.

Since the introduction of MiFID I in 2007, these exchanges have collectively earned at least £5.67 billion from market data, justifying their pricing as essential for the maintenance of fair and orderly markets but other competing trading venues have managed to become profitable and process similar volumes in a fair and orderly manner without the same reliance on market data revenues. If market data costs were directly correlated to market share, the study finds that exchanges, leveraging their incumbent status, could have generated up to £4.93 billion (€5.83 billion) in surplus revenue from market data fees since 2008. Alternatively, they could be earning up to 7.64 times more than competitors for processing similar volumes and market share.

The research raises questions about exchanges’ role in regulated markets including: whether they are truly serving the equity market community, whether they are investing in equity market development and whether regulation has kept pace with the evolving business models and interests of exchanges where equity markets are now a minority business.

Ultimately, the study argues that market data’s value must align directly with trading activity. It calls for regulation to ensure data is treated as a by-product of trading by all trading venues rather than a separate revenue stream. Failing that, legislative intervention should redefine all trading venues’ objectives to ensure they support market growth as their primary objective explicitly. Once the transparency of exchange data fees is improved, it will be easier to understand the pricing of data dissemination imposed by third party data vendors within the value chain.

“This study reveals a concerning trend in European equity markets,” said Mike Bellaro, CEO of Plato Partnership. “When essential market data becomes disproportionately expensive, it creates barriers to entry and stifles the very innovation that policymakers are trying to encourage. This is particularly relevant as the UK and European Union seek to enhance their market competitiveness.”

Adam Farkas, CEO of AFME, said: “Accessible market data is a critical component of healthy and well-functioning capital markets. Irrespective of the asset class, data empowers and allows all market participants to make informed decisions when allocating capital which in turn, supports a competitive and growing capital market. We thank Market Structure Partners for undertaking this critical research which shows that the much-needed growth in Europe may be undermined if attention is not paid to these concerning developments”.

Thomas Richter, CEO of the German Investment Funds Association, BVI, said: “Asset managers are legally forced to use stock market prices, benchmarks, credit ratings, and other data from third- party providers. Because of the existing oligopoly market structures with only a few providers per segment, there is a case for competition law authorities. We call for an EU data vendor act that regulates the commercial behaviour of these entities. Because if we don’t, the already considerable cost pressure in the fund industry will intensify even further – also to the disadvantage of the consumers.”

Tanguy van de Werve, Director General of EFAMA, said: “Competitiveness is high on the policy agenda, including boosting the competitiveness of EU capital markets. Addressing the harmful impact of the oligopoly at the heart of market data access would lower trading costs, encourage new market entrants, and promote innovation. EU capital markets are underperforming their global peers, a trend that has only solidified over the last few years. Tackling high market data costs should be an obvious choice for policymakers looking to reinvigorate European capital markets.”

Piebe Teeboom, Secretary General of the FIA EPTA said, “The MSP report evidences the ongoing increase in the cost of market data over recent years. This adds significant cost to participating in European financial markets, at a time when Europe is focussed on finding ways of boosting growth and competitiveness. In the interests of ensuring Europe remains an attractive destination for capital allocation, we encourage policymakers and regulators to consider how the report’s findings impact these objectives.”

A copy of the complete research can be downloaded here.

Source: Market Structure Partners