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British financial watchdog to probe competition in financial data

FILE PHOTO: FCA signage seen at their head offices in London

By Elizabeth Howcroft and Huw Jones

LONDON (Reuters) -Britain's Financial Conduct Authority (FCA) said it could change rules on trading data if it finds barriers to competition in a review of costs and investor access to the wholesale market.

The FCA published a report on Thursday which found that competition is "not working as well as it should" in the trading data market, where investors buy information about activity in financial markets, including what prices assets like stocks and bonds are being sold at, in order to make decisions.

Concentration among few firms leaves investors with little choice over who they buy data from, resulting in additional costs for data users which "are likely to be passed on to UK retail investors and savers" the FCA said.

The market review will investigate possible competition problems in the market for benchmarks, credit ratings data and market data vendor services, the FCA said.

Despite rules in place requiring delayed trading data to be distributed for free, many users end up with little choice but to pay it, the FCA added in a statement.

And if the FCA finds evidence of competition problems in any of these markets, it could address them with "rule changes".

London Stock Exchange Group CEO David Schwimmer said on Thursday the global data market is competitive.

The FCA review comes at a key moment for markets as the watchdog is working with Britain's government to develop a way to collect wholesale data across the market and distribute it in a standardised feed, called "consolidated tapes".

"The findings of this review will help inform the design of consolidated tapes," the FCA said.

Past attempts to create consolidated tapes in Europe have stumbled as exchanges refused to provide data at a cost that makes a tape viable, and the European Union has proposed a law to tackle this.

Britain and the EU are aiming to catch up with Wall Street, which has had a tape for share prices for many years, helping investors find the best deals across multiple trading platforms.

(Editing by Alexander Smith)