Just a couple months ago it might have been anyone’s game. All the RRMs were out pitching and selling, with great gusto. But as of right now we feel pretty comfortable saying that EFETnet is the round one winner. You really have to hand it to them. EFETnet’s done a spectacular job getting a good number of brokers lined up. And EFETnet seems to have won the majority of MPs. If you think about it, just getting the brokers lined up is a herculean effort and, in the end, a job well done.
But Like Westeros, The Seeds of Discontent are Blooming
Fair amount of consternation by RRMs that the exchanges (pretty much across the board) won’t lift a finger to connect to them directly. It’s natural that RRMs would want exchange data. There’s a ton of it. And it seems a legitimate request, that MPs should be able to dictate where their data goes.
There’s just one problem: reality. Exchanges have been handling client trade data for a long time and I can tell you from experience, they don’t fool around with this stuff. There’s only two entities in the world that can extract data from behind the exchange fortress: Clients and Regulators.
What the RRMs are hoping for is a direct pipe to their RRM from the exchange. I’ll eat my hat if I’m wrong, but this is never going to happen with any major exchange:
It’s just insane potential liability there, and not a dime of revenue to offset the risk even if small. It’s the real reason that major exchanges set up their own RRMs. It certainly isn’t the money (RRMs are natural money losers). An exchange RRM ensures data never has to leave their secure ecosystem. We can talk SFTP and API sharing with other RRMs until we are blue in the face. The exchanges are not going to budge. In the end, if the MPs want their data in another RRM, they are going to have to move it themselves.
Competition Still Intensifies
Many RRMs have dropped their rates to …what is basically zero or some trivial amount. Even RRMs not yet approved have unbelievably cheap rates for reporting. It kind of makes one wonder how they will all survive.
We kept hearing that ICE is doubling down on its commitment to the European market by lowering eConfirm fees. The word is that ICE has lowered confirm rates down to €0.22. When I heard this I pretty much spit up my coffee. So, I called ICE and asked. The answer: “YEP.” This kind of move tends to spark the competitive pricing we usually see with mobile phones and airlines. Right now I suspect companies average €2.50-€3.00 per match. No where to go but down from here.
By the way if you are looking to convert exchange data into ACER XML have a look at this video. Its easy.