What are your expectations for how demand for market data will evolve over the next few years?
The main trend we’re observing is the increased demand for market data globally, particularly from international investors wanting access to US and European markets. In the third quarter of this year, Cboe saw 40% of our data sales coming from outside the US and we expect that to continue.
This demand is being driven by global interest in the US market – investors want access to the outperformance of stocks like the ‘magnificent seven’ – as well as the expansion in retail trading across the globe. In Europe, we recently published our first retail survey with The Options Institute, Cboe’s education arm, and the results suggested a strong interest in exchange-traded equity options but that more education is needed. This could signal a shift of European retail investors from OTC leveraged products like CFDs to exchange-traded derivatives. Both trends are necessitating access to robust and reliable market data.
Also, we’re seeing notable demand for our European equities data in Asia Pacific, as brokers look to offer a broader range of securities to their customers. Our strong market share in European equities and high levels of market quality makes our data attractive to these firms.
What are some of the changes impacting how market participants are consuming market data, both in Europe and globally?
As we look to enhance the distribution of our data globally, it is becoming even more apparent that customers want to consume data as seamlessly and efficiently as possible. One way to achieve that is by offering flexibility in the way customers access data. At Cboe we do that by making our own data available through various delivery mechanisms, including via cloud, helping to ensure lower infrastructure costs for those consuming it. Our North American, European and APAC equities data is available via the cloud, and we’ll be looking to bring on more content to meet the growing demand we’ve seen.
The other change that will impact consumption in Europe is (finally) the introduction of a consolidated tape for equities. Incumbent European exchanges, through their operation of closing auctions and in the absence of a consolidated tape, enjoy a dominant position in the provision of market data to the institutional community. We believe the introduction of a real-time pre- and post-trade consolidated tape in both the EU and UK will be key to introducing a competitive dynamic in the provision of market data. It’s one of the reasons we launched SimpliCT in conjunction with Aquis Exchange to explore a bid for the CTP.
Finally, there is also new regulatory technical standards from ESMA on what constitutes “reasonable commercial basis”, the principle by which market data is to be priced by EU exchanges. The final text came out this week and whilst the industry is still analysing what it may mean, it has the potential to change the market dynamic and licensing constructs we’re all familiar with today. All in all, 2025 will be an interesting year in Europe!
What are some trends you expect to see in 2025 when it comes to market access?
As with market data, customers are looking for better, globally consistent and more efficient services from their key providers when it comes to market access. Something that we have been really focused on is offering an enhanced access layer architecture for equities and options markets across the globe.
Cboe has presence in 27 markets across five asset classes and all those markets now sit on one common technology platform (except our Canadian exchange, set to be migrated in 2025). One of the benefits of having a single technology platform is the efficiency and globally consistent experiences it allows us to offer. It creates an ability for us to launch something in one region and then easily replicate it in another. For example, ‘dedicated cores’ allows members and sponsored participants to host their specific logical order entry ports on their own CPU core(s), rather than sharing a core(s), which reduces latency, enhances throughput and improves performance through increased determinism. Dedicated cores is an optional service and Cboe will continue to offer shared access, as some customers will always want that service.
We rolled this service out in US earlier this year and are now in the process of expanding it to Europe and Australia.
What areas of the business is at the fore of Cboe Data Vantage’s priorities for 2025 and beyond?
Cboe’s newly branded Data Vantage division better reflects the broad spectrum of services that were formerly part of our Data and Access Solutions business. Our priority is to continue to meet demand for data, access and analytical services through our three distinct pillars: risk and market analytics, Cboe global indices and market data and access services, along with the newly defined client experience arm, which will help our clients navigate the evolving landscape.
We see Europe and APAC as key areas of growth for this business. Given that data is a precursor to trading, our focus is to leverage Cboe’s leading position in multiple asset classes around the world to export our data globally and import trading into our markets.
There are lots of exciting projects on the horizon. One trend we’re leaning into is the desire of participants to consume more data and insights through cloud-based marketplaces rather than file-based delivery. As a result, Cboe offers a range of delivery methods for its historical and derived datasets and recently we made some of that data available within Snowflake to increase access to that data. We’re working with other vendors such as Google and AWS to do the same thing.
Another significant trend we’ve seen in the US and has the potential to take off in Europe is the rise of defined outcome ETFs, an ETF with a derivative overlay with a defined upside whilst offering downside protection. Our Cboe Global Indices business has been a leader in this space and has developed the capabilities to deliver some interesting indices for our customers and issuers.