[ N E W S
markets earlier this year, when a
roundtable discussion hosted
by the Securities and Exchange
Commission (SEC) resulted in a
heated debate between a group of
high-profile industry representa-
tives.
Later that month, Investors
Exchange (IEX) became the first
exchange to publicly disclose its
costs related to producing market
data and connectivity, suggesting
that incumbent exchanges could
be marking up charges for such
services by as much as 4,000%.
European solution
While the European markets have
not seen a similar level of public
displeasure directed at the cost
of market data fees compared to
its North American counterpart,
ESMA has recommended the intro-
duction of a real-time consolidated
tape for equity instruments as a
solution.
“Transparency is important to
ensure that markets are fair, sound
and efficient. However, after nearly
two years of operating under MI-
FID II, we are still lacking a reliable
R E V I E W ]
view of liquidity across the EU,”
said Steven Maijoor, chair of ESMA.
“We need to establish a real-time
consolidated tape for equity instru-
ments to remedy the fragmentation
of EU markets, create a real single
market and so contribute to the es-
tablishment of the Capital Markets
Union.”
While ESMA was realistic enough
to note that such an undertaking
would present a “technically de-
manding task” requiring “substan-
tial investment of both time and
resources by all parties involved”, as
well as changes to the current legal
framework.
MiFID II laid out the require-
ments for voluntarily consolidated
tape providers to come to the fore,
however ESMA recognised within
its review that “it appears unlikely
that within the current legal frame-
work a CTP (consolidated tape
provider) will emerge in the future.”
ESMA identified three primary
reasons as to why such a provider
has yet to materialise – a lack of a
business case and limited rewards
for an equity tape provider, the
strict legal requirements stipulated
by MiFID II on such an entity, and
competition from non-regulated en-
tities that would hold a significant
advantage by not being subject to
the same regulatory framework.
Market data users also highlight-
ed issues relating to data quality,
timing, consistency and complete-
ness, alongside the “significant cost
and complexity” of market data
agreements, as key reasons why
a consolidated tape has yet to be
implemented.
ESMA stated that despite these
challenges it will recommend the
establishment of a consolidated
tape for European equities to the
European Commission and will
continue to publish reviews on the
impact of MiFID II in consultation
with the industry.
Issue 62 // TheTradeNews.com // 21