The Financial Conduct Authority (FCA) is scrutinising the practices of the London Stock Exchange Group (LSEG) and the landlord of the LSE data centre building. The inquiry is centred around competition for low latency connectivity services (LLCS) between certain trading venues. The FCA is seeking views on its proposals to ensure fair access to the rooftop of the data centre building.
At present, the LSEG is the only entity allowed to use the rooftop of the data centre building. This exclusive access potentially provides LSEG with a competitive edge in terms of LLCS. These services are crucial for high-speed trading, where milliseconds can make or break a deal. By controlling the rooftop, LSEG can potentially offer faster data connections than its competitors, potentially hindering competition.
The FCA is concerned about this possible anti-competitive behaviour. Consequently, it is seeking input on its proposal to open up access to the rooftop. This move would level the playing field for competitors in the provision of LLCS. As such, it could enhance competition, benefitting consumers and businesses alike.
Implications of the FCA’s initiative
Forcing the LSEG to share access to the rooftop of its data centre could have significant implications for the fintech sector. Improved access to low latency connectivity could boost competition and innovation in the sector. This, in turn, could stimulate growth and investment, benefiting the wider economy.
Moreover, the FCA’s move signals its commitment to ensuring fair competition in the UK’s financial markets. It highlights the regulator’s willingness to intervene when necessary to protect the interests of consumers and businesses. This proactive stance is likely to be welcomed by many in the industry.
Despite these potential benefits, the FCA’s proposal may face resistance. The LSEG, for instance, may argue that its exclusive use of the rooftop is a legitimate business advantage. It could also raise concerns about the practicalities and costs of sharing access to the site.
The FCA is now seeking views on its proposals. It is inviting input from a wide range of stakeholders, including businesses, consumers and industry experts. This consultation process will help shape the regulator’s final decision on whether and how to proceed with its plans.
