LSE Group's roof area faces intense scrutiny from the Financial Conduct Authority (FCA)

The Financial Conduct Authority (FCA) is investigating whether London Stock Exchange Group (LSEG) has breached competition law by restricting third-party Low Latency Communications Service (LLCS) providers from accessing the rooftop of its data centre in Docklands.

Currently, only LSEG can access the building's rooftop for LLCS. This restriction places other providers' radio units at a greater distance from the London Stock Exchange (LSE), potentially impacting their performance.

LSEG's data centre in Docklands houses low latency connectivity services (LLCS) radio equipment on its rooftop. The exchange uses its own Exchange Wireless Service (EWS) for LLCS, but high-frequency traders (HFTs) and market makers, who rely on speed and up-to-date data, are particularly impacted by the issue.

The market for LLCS is competitive, with customers able to choose between various providers. Notably, McKay Brothers Communications and New Line Networks, LLCS providers owned by Jump Trading and Virtu Financial, have connections established on the ICE-LSE route.

The FCA warns that non-EWS LLCS providers could be burdened with significant additional costs in their route constructions and limited route designs as a result of the rooftop lockdown. The FCA has not yet concluded whether competition law has been broken, but provisionally considers that LSEG's conduct is not objectively justified.

In response to the investigation, LSEG and the landlord of the data centre building have proposed ending LSEG's exclusive rights to the rooftop and introducing a space for third parties equal to their own. This move could potentially lead to increased competition between LLCS providers on the ICE-LSE route.

The proposal is part of a larger effort to address concerns about competition between third-party LLCS providers. LSEG insists that its own EWS services gain no latency advantages from location.

The consultation on the proposal is running until 29 September. It provides an opportunity for stakeholders to voice their opinions on the proposed changes to the rooftop access. The outcome of the consultation could have significant implications for the competitive landscape of the LLCS market.

Neither McKay Brothers Communications nor New Line Networks have commented on the situation. The landlord of the Docklands data center where LSEG operates its data centre roof is Land Securities.

It is important to note that the investigation and the proposal are ongoing, and the final decisions have yet to be made. The FCA will continue to assess the situation and make a determination based on the evidence presented.

LSE Group's roof area faces intense scrutiny from the Financial Conduct Authority (FCA)