The UK reported a shake-up in the availability and price of financial market data 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 end of the Brexit transition period there one year old.
The Financial Conduct Authority said an initial study, which will begin this summer, will examine concerns that complex contracts for benchmarks and indices prevent switching to cheaper, better and more innovative alternative providers.
Benchmarks such as the FTSE 100 blue chip index are widely used by asset managers and banks to track and compare valuations of assets such as stocks and bonds.
“By the end of the year, the FCA will launch a second market study to assess whether high fees for accessing credit rating data are increasing costs for investors and limiting new market entrants,” FCA said.
The sector is dominated by Moody’s, Fitch and S&P, whose ratings are used by investors to assess the risk of a company in which they are considering investing.
The FCA said it would also start collecting additional information on competition in the wholesale data market.
This data is used by asset managers and banks to find the best price and liquidity for a stock or bond, which is key to ensuring that end investors like pension funds get the best offers on a range of exchanges and other trading platforms.
“Concerns have been raised that limited competition could increase costs and impact the types of assets investment managers buy and sell,” the FCA said.