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The FCA initiates an analysis on data use in financial markets
The FCA initiates an analysis on data use in financial markets
Regulation

The FCA initiates an analysis on data use in financial markets

By Eleonora Spagnolo - 10 Mar 2020

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The Financial Conduct Authority (FCA) is looking into how financial data and market analyses are sold. The UK’s FCA announced yesterday that it will initiate an analysis to see whether this data is being put on the market, at what price, how it is used and whether there is effective competition. 

The aim is to detect any misconduct and possibly improve the work carried out. 

This will be done using a CFI, an acronym that stands for Call for Input, which is a questionnaire that will be submitted to those in charge.

The FCA believes that trading and benchmark data play a key role in the financial markets sector because they are used for: 

  • trading, 
  • evaluating investments, 
  • evaluating decisions, 
  • complying with the requirements set by regulations.

However, those who have this data also make it available for other services. This leads to the need to understand whether the buyer is fully aware of the price at which they are buying and who the seller is.

The purpose of the Call for Input is proactive, inviting members to share their views on the matter so that the FCA itself can have a complete picture of how this data is generated, used and offered on the market

Although the cryptocurrency sector is never explicitly mentioned, the FCA expressly states in the official statement that:

“The scope of the review includes both FCA-regulated and connected, non-regulated activities and firms”.

Therefore, no company can be said to be exempt. Moreover, the FCA itself has shown that it is paying great attention to the cryptocurrency sector, publishing a special guide in which it has made it clear which companies require authorization from the English financial authority. Not even the shortcomings of the BitMEX exchange would have escaped the FCA. 

The Call for Input will allow the FCA to arrive at a comprehensive analysis, examining how unregulated companies can affect the competitiveness of the market. 

The analysis will continue until May 1st, 2020 and the outcome will be announced in autumn, suggesting possible changes in the sector. 

Christopher Woolard, Executive Director of Strategy and Competition at the FCA, explained: 

“Wholesale financial markets play a vital role in our economy, and it is important that they work well. There is rapid and wide-ranging innovation in data in wholesale markets as firms become better able to gather and analyse data. More efficient, comprehensive and timely data for wholesale market participants have the potential to generate significant benefits. But these changes may also create new risks that may require us to act. We are launching this review to better understand any risks and assess whether FCA action is needed”.

Eleonora Spagnolo
Eleonora Spagnolo

Journalist passionate about the web and the digital world. She graduated with honours in Multimedia Publishing at the University La Sapienza in Rome and completed a master's degree in Web and Social Media Marketing.

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