FX: Stemming the tide of rising data costs
Innovation and price transparency around market data remain a bone of contention among FX market participants, although data providers insist they are working to reduce costs.
FastMatch revealed in 2016 it was working with other platforms and market makers to create a consolidated tape for FX to provide a last-sale data feed with price, size and timestamps.
However, despite its worthy ambition to provide more data at lower cost, the voluntary participation aspect of the foreign-exchange consolidated tape (FXCT) project was an obvious limitation.
FXCT was inspired in part by the Consolidated Tape Association, which oversees the dissemination of real-time trade and quote information on a number of exchanges. Yet the efficacy of this initiative was thrown into question by a recent report by the Healthy Markets Association, which indicated that non-competitive forces for equity market data have created substantial upward pressures on prices.
The report notes that a market participant who wanted the fastest connections with the most relevant trading information for Bats, New York Stock Exchange and Nasdaq has seen its costs rise from $72,150 per month on June 1, 2012, to $182,775 on June 1, 2017.
ParFX chief operating officer Roger Rutherford describes market data fees in spot FX as one of the most opaque areas of trading, suggesting that many platform providers offer special deals to those with the deepest pockets and different cost packages that are dependent on customers’ style of trading or overall volumes traded.