Market participants have grown increasingly frustrated at rising exchange-led data costs, as they struggle to keep up with a welter of new regulations dictating data use.

Many believe exchanges have indulged in monopolistic practices by ramping up data fees, as well as introducing complex and strict new data licensing measures.

“In terms of the data costs, they do not rise uniformly, they come in waves. This results in an inflationary effect. You have internal infrastructure costs, but this combined with the inelastic demand for data causes end-user costs to increase,” said Will Cowling, exchange market data strategy, UBS.

Jork Muijres, product developer at Transtrend B.V, a Dutch-based asset manager, explained his firm’s data fees amounted to €3 million last year, with costs rising 30% over 12 months.

The impact this having on smaller sized firms could be detrimental to market activity.

“Our concern is for some of the exchanges, and the smaller exchanges, you only trade one or two contracts but you pay large amounts to gain access to data. The danger I see is if people have to pay this price for data, will they be willing to continue trading there? I don’t think so. For small to mid-sized CTAs, what could happen is less individuals active in the market,” said Muijres.

To mitigate these rising costs innovation is needed, however the pace of innovation has been slow and ineffective.

“There would have to be innovation to get around the licenses around data held by the big monopolies. You are not going to find a way to not pay that cost,” said Alan McGroarty, CEO, Tower Research Capital Europe.

“Exchanges are the custodians of liquidity, if they want to generate increased returns, data is an easy target. Someone is always going to get it in the neck when a rate changes. Maybe with the clearing changes we will see more distribution of derivatives.”

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The exchanges include Eurex, ICE Futures Europe, CME Europe, London Stock Exchange (LSE) and the London Metal Exchange (LME).

Approval from the Commodity Futures Trading Commission (CFTC) will enable the exchanges to provide direct access to its electronic order book for futures and options trading.

“This is a very important milestone for London Stock Exchange Derivatives Market, allowing us to significantly increase our appeal and reach in the US,” said Nikhil Rathi, CEO of the LSE. “This registration will provide US based clients with more choice, allowing them to access directly a range of derivatives listed on London Stock Exchange Derivatives Market.” 

Cees Vermaas, CEO of CME Europe added: “With FBOT (foreign board of trade) status, CME Europe is closing the gap between the continents by being able to offer experienced US participants access to the European futures and options markets via CME’s London-based exchange.”

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Just over 13 billion contracts were traded in the first half of 2016, up 7% year on year, according to statistics from the Futures Industry Association (FIA).

Activity on US derivatives exchanges jumped 9% to around 4.3 billion contracts traded, while derivatives markets in Europe and Asia increased 7% to over 8.8 billion contracts.

Interest rate futures volumes increased 2% to 1.4 billion contracts globally, while FX futures volumes saw the largest jump by 26% to around 1.3 billion contracts traded.

Last week several derivatives exchanges released their half-year trading volumes, with many including CME Group and ICE reporting new records off the back of heightened volatility.

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London Stock Exchange Group (LSEG) and Deutsche Boerse reported declines in cash market turnover despite improved volumes, as BATS Chi-X Europe remains the top stock exchange in Europe and Euronext breaks records in average daily transactions.

LSEG’s January statistics reported a fall in the value of shares traded, but saw a significant increase in trade volume.

The group reported a 10% increase in trades on its UK order book compared to January last year, but the value traded declined by 3.4% from £107 billion to £103 billion.

LSEG’s MTS business unit reported declines in average daily trades, with MTS Cash declining 20.4% to 45,666 trades in January. MTS Repo also suffered a 7.2% decline in average daily volume trades compared to January last year.

Turquoise MidPoint, however, reported a 52.3% increase in trades in January this year, compared to the same period last year, with value traded increasing 17.3% to £9.95 billion.

European exchange, Euronext, reported a 0.6% increase in average daily transaction value in January on its cash order book, which stood at €8.6 billion.

January 2016 was a record month for Euronext as average daily number of cash market transactions reached over 2.2 million, a 12% increase from January 2015. 

Deutsche Boerse has reported a decline in turnover across all asset classes, with turnover reaching €133.7 billion, down €14.8 billion compared to January last year.

Its equities cash market turnover reached €112.9 billion, while turnover in its bonds markets was €0.5 billion.

The exchange group’s Xetra platform reported 25 million trades were executed in January, increasing by 3.3 million trades compared to January last year.

BATS Chi-X Europe reported total notional value traded in January this year at €280.6 billion and average daily notional value at €14 billion, compared to last year’s €13.6 billion. BATS said it has a 24.9% market share in Europe, up slightly from 24.2% a year ago.

BATS recently revealed a UK exit from the EU would be a great risk for the exchange operator, and it could leave London if the country opts to leave the EU in an upcoming referendum.

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After the financial crisis Euronext was subjected to the same capital adequacy rules as some European banks, meaning it was also subjected to the same capital requirements – something which the company disputed.

Euronext claims it was the only exchange operator categorised in this manner.

The rules required that the company’s balance sheet show positive tangible equity by 2017.

In May, Euronext said that it believed the requirement could negatively impact its strategic plan and create an unlevel playing field against its competitors.

It concluded that an appeal should be launched in order to obtain an independent, fair, judgment.

Euronext appealed against the Dutch Ministry of Finance at the District Court of Rotterdam on 31 March 2015.

The company’s share price had stood at €45.10 at the opening of trading on 17 December 2015 before its shares were suspended at 9.00am Central European Time ahead of the verdict.

In a statement, Euronext said: “This is a precautionary action pending a verdict that is to be received later this morning from the District Court of Rotterdam, The Netherlands in the appeal procedure between Euronext N.V. and Euronext Amsterdam N.V. and the Dutch Minister of Finance related to the consolidated capital requirements.”

Trading is expected to resume later today following an analysis of this verdict. When contacted by The TRADE, a spokeswoman for Euronext said a further statement would be released later today.

Earlier this month, Euronext announced it would appeal a €5 million euro fine following the decision from the French market regulator, Enforcement Committee of the Autorité des Marchés Financiers (AMF).

It is claimed that Euronext failed to meet its professional obligations and favoured one market member over others.

Stéphane Boujnah, Euronext CEO and chairman of the managing board, said: “The AMF Enforcement Committee’s decision is particularly open to dispute, totally disproportionate and completely anachronistic.”

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Japan Exchange Group (JPX) has announced cooperation plans with Taiwan Futures Exchange (TAIFEX) to introduce Tokyo Stock Price Index (TOPIX) futures with the launch scheduled for December.

Under the launch, the TOPIX futures will be denominated in the new Taiwan dollar (TWD).    

The partnership, which marks the first time TAIFEX has introduced a foreign equity exchange, will allow Taiwan investors additional exposure to Japanese equity markets as well as providing the potential for increased derivatives trading between the two countries.  

“We are very pleased to be looking at the upcoming launch of TWD-denominated TOPIX futures on TAIFEX. Through this cooperation, JPX hopes Taiwan investors have more interests in Japanese market,” said Akira Kiyota, CEO of JPX.  

“We look forward to further deepening the ties between the Taiwanese and Japanese capital markets as partners in Asia.”

TAIFEX’s chairman Len-Yu Liu spoke of the importance of such partnerships.

“In response to the rapidly changing and globalised financial market environment, cooperation and partnerships are becoming ever more important.

“We are excited about our tie-up with JPX to launch TOPIX futures, which enables Taiwan investors to trade one of the most heavily traded equity indices in Asia.”

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Intercontinental Exchange (ICE) has continued its recent string of acquisitions by securing the purchase of Interactive Data Corporation (IDC) in a deal worth $5.2 billion.

The agreement follows other major acquisitions for ICE which also bought NYSE for $8.2 billion in 2012, The Singapore Mercantile Exchange for $130 million in 2013 and data company SuperDerivatives in October 2014 for $350 million.

The deal, which was unanimously approved by boards of both companies, is broken down into $3.65 billion in cash alongside $1.55 billion in ICE common stock. ICE will purchase the financial market data provider from Silver Lake and Warburg Pincus.

ICE Chairman Jeffrey Sprecher said, “This transaction furthers our expansion into meeting the financial information needs of our market participants globally.

“With IDC as the cornerstone in the next phase of extending our services, we will build on our track records of solid execution on integration and innovation by focusing on the needs of our customers in the evolving data services marketplace.”

Based in Bedford,Massachusetts, IDC provides financial data to a range of buy-side institutions.

“Today’s announcement marks the next step in an exciting journey for IDC,” said Stephen Daffron, CEO of IDC

“With ICE, we have the long-term capital, strategic support and collective set of relationships to further grow our company and evolve our platform in the rapidly-changing capital markets landscape.”

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Singapore Exchange (SGX) has announced a net profit increase of 28% year-on-year at the end of Q1 FY 2016, largely down to a boost in derivatives revenue.

The net profit for July to September was $99 million.

Derivatives revenue grew by 69% to $90.9 million while revenue from derivatives in equities and commodities grew 67%, this was helped by a 82% increase in volume growth in SGX’s FTSE China A50 products.

Additionally, increases in collateral management, license, and membership are all linked to the increase in profits.

Total revenue was up by 30% to $220 million with growth in securities including a 14% revenue increase in securities trading to take it up to $55.9 million. Year-on-year, securities daily average traded value (SDAV) increased 27% to $1.23 billion.

Chief executive officer Loh Boon Chye spoke of SGX’s efforts to improve liquidity in the Securities market. 

“We are encouraged by the progress of our initiatives to increase the liquidity of our securities market and will continue to build on this momentum,” he said. “We appreciate the efforts of retail brokers during the recent market volatility in August, which helped increase retail participation in STI stocks.

“We remain confident about our future, and will continue to invest in growing our businesses.”

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The Singapore Exchange (SGX) has launched a new index business where it plans to build custom indices for asset managers in Asia.

SGX Index Edge will allow the exchange to capitalise on the growing demand for customised index-linked investment opportunities across the region.

SGX has been conducting a beta launch on a series of futures-based indices tailored for product issuers of Exchange-Traded Notes (ETNs), OTC (Over-the-Counter) products and retail structured products since October 2014.

The Access Asia suite of 60 indices are distributed through SGX’s network of brokers, data vendors, independent software vendors, other exchanges and trading firms.

“As Asia’s most international exchange and a leading market infrastructure for investors across Asia, we are in a unique position to develop Asia-focused index capabilities, as a natural extension of SGX’s existing suite of products and services,” said Loh Boon Chye, Chief Executive Officer of SGX.

The launch of SGX Index Edge demonstrates our ability to continually innovate to position SGX strongly for the long-term as we look towards becoming the pan-Asian index provider of choice.”

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Eurex is expanding its equity index derivatives segment with the launch of Mini DAX futures at the end of October.

The move comes as the German exchange’s equity index segment continues to surge, with 90.6 million contracts traded in September, up from 68 million in the same month of the previous year.

Futures on the DAX index recorded 2.9 million contracts while the DAX options reached another 3.8 million contracts. 

The new mini products with lower contract values will be a fifth of the standard DAX futures, with a contract value of €5 per index point and the minimum tick size will be one index point.

“The new Mini DAX Futures contract addresses together with the existing DAX Futures the needs of our users for more precise fine-tuning of their hedging positions,” said Mehtap Dinc, member of the Eurex Executive Board. “At the same time, it is also aimed at semi-professional investors who are primarily investing into OTC products like CFDs because of the large contract value of the DAX Futures.”

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