Reference no: EM132652248

Use the synopsis of this 8/27/20 The Economist article ("Big Fish: In 20 years, exchanges have gone from clubby firms to huge conglomerates"), to answer this question.

"Stock exchanges used to be owned by their members, which were mostly banks and brokers. When the biggest went public in the 2000s, they earned their revenues by charging fees on equity issuance and transactions. The exchanges sought to diversify by expanding abroad and becoming trading venues for other assets, like derivatives and currencies. Most moved into clearing and settlement facilities, too.

Now, the elite exchanges have turned their attention to data. On August 6th ICE (which owns the NYSE) said it had agreed to pay $11bn for Ellie Mae, which tracks the mortgage industry. Also, the LSE is awaiting approval of its $27bn bid for Refinitiv, a market-data firm. The hunt, says David Schwimmer, LSE's boss, is only beginning. Whereas trading volumes are cyclical, indices and data are typically sold via more stable annual subscriptions. Oliver Wyman, a consultancy, expects trading revenues to stagnate or even decline, but those from crunching data to grow by over 5% annually in coming years."

Question: How do you think the big exchanges' diversification into data services will affect the four attributes of liquidity for the financial markets that they run (e.g., ICE's ability to create and maintain liquidity at its NYSE subsidiary)?