Exclusive Online Only ContentEC Launches Antitrust Probe Involving Thomson Reuters Codes
November 10, 2009
The European Commission confirmed today that it has launched an investigation into whether the manner in which Thomson Reuters supplies proprietary identification codes for equities, stock indices and commodity futures violates antitrust laws of the European Union.
The investigation targets the Reuters Instrument Codes (RICs) that Thomson Reuters supplies its customers and “whether customers or competitors are preventing from translating RICs to alternative identification codes of other database providers (or so called mapping) to the detriment of competition,” according to a statement issued by the EC Wednesday.
The commission said the initiative did not imply it had proof of any wrongdoing.
If the EC finds evidence of antitrust abuse, it can demand that a company change its behavior or face fines for each year the company breaks the law.
RICs—codes that identify financial instruments – are used to retrieve information from Thomson Reuters real-time data feeds. The feeds include real-time market data sent to software applications developed by banks and financial institutions. Currently, the ticker-like RIC codes cannot be used to access data from other market data vendors, just Thomson Reuters. Thomson Reuters enforces its intellectual property rights to the codes.
“The problem is the restriction that is placed on the use of the codes. If you subscribe to the Thomson Reuters real-time market data feed, you're not allowed to use the identification codes alongside a feed from another service provider," said Jonathan Todd, a spokesman concerning competition issues for the EC. Thomson Reuters has three rivals in this area and "none of them have this restriction,” Todd added.
Without the ability to map the Reuters codes to codes used by other feeds, customers of Thomson Reuters may be “locked into” working with Thomson Reuters. Replacing RICs by reconfiguring or rewriting software can be long and costly.
Thomson Reuters rival Bloomberg recently launched a new website where industry participants can freely search for, access and re-use identifiers developed for the Bloomberg Professional service and enterprise data products. Bloomberg also said it will publish the methodology behind how its identifiers are created.
As reported by Securities Industry News on Oct. 7, market speculation about a possible EC investigation into Thomson Reuters emerged after the EC sent European firms a questionnaire asking about Thomson Reuters licensing policy for the RIC codes.
In a statement, Thomson Reuters said it received a questionnaire from the EC on Nov. 3 on its policies and would cooperate with the EC’s preliminary investigation.
“Thomson Reuters provides its customers with consistent, dependable and convenient access to several million financial instruments from almost every electronic trading venue around the world,” the company said, in a prepared statement. “Thomson Reuters data is reliably and consistently identified by a managed code which we create and maintain to enable investigation of the company’s global content.”
The opening of formal proceedings against Thomson Reuters follows a similar move by the EC in January to determine whether Standard & Poor's abused its dominant market position as a numbering agency by forcing European firms to pay for the use of U.S. securities numbering codes when accessing data from third-party vendors. That investigation has not been concluded.
