According to the French financial regulation the AMF; in the first half of 2022 they conducted a series of inspections on the procedures of four companies that provide market data and run one or more trading venues.
“as part of its supervisory priorities for 2022 and in accordance with those established for the European Union by the European Securities and Markets Authority (ESMA)”.
The primary goal of the investigation was to confirm that the four firms were in conformity with the regulatory obligations outlined in MiFIR from 1 January 2019 to 30 June 2022, as well as the actions these firms had taken to implement the ESMA guidelines.
According to the AMF: the investigations paid close attention to the availability, discernibility, and transparency of market data policies; the provision of market data on a reasonable commercial basis;
A a number of issues were identified that were considered probable legal violations, which were made worse for two of the panel’s companies by the lack of documentation in the outsourcing agreements they used.
There were issues with pricing policies’ accessibility, clarity, and transparency. For instance, a few of the companies didn’t provide the public with information about the costs involved with some of the potential uses of market data. These uses included disseminating the data, integrating it into apps, or using it for functions other than presentation. The AMF also pointed out that none of the companies had adhered to the idea of disaggregating market data, which may harm consumers by making them buy more data than they require at a higher cost.
The AMF looked at a variety of procedures. Among the questionable behaviours noted were neglecting to differentiate between the expenses of creating and disseminating market data in market data policies and pricing schedules, as well as failing to disclose the procedures used to calculate the margin produced by the market data provision activity. The regulator found that one company violated the rule that prohibits discrimination in the distribution of market data by charging various rates for the same use of market data to various customer categories based on criteria that were not made publicly available. This was just one of the flaws that were pointed out. Additionally, the justifications for not releasing market data on an individual basis were not made known to the public.
The AMF identified a few instances of bad practises, such as making data available for a shorter period of time than advised by the ESMA standards, with regard to the free distribution of delayed data. On the other hand, it is excellent practise for all four companies to provide the public with delayed data in a machine-readable manner.
The AMF wants to significantly enhance and improve the operational breadth of the systems in place at businesses participating in the provision of market data based on the lessons learnt from this latest round of SPOT inspections.