[ F I N A L
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H AY L E Y
M C D O W E L L ]
Hayley’s
Comment
2020: The year of the consolidated tape?
T
he European equities
trading industry
has been operating
under the MiFID II
framework for two
years now, getting to grips with
double volume caps, transaction
reporting and the unbundling
of payments for execution and
research. But, much to the dismay
of traders across Europe, there is
one aspect of the regulation that
authorities have failed to deliver:
the consolidated tape.
Although not a mandate,
requirements applicable to
a ‘voluntarily established’
consolidated tape for equity
instruments under MiFID II were
laid out by ESMA. In response to
a consultation this year, whereby
ESMA sought feedback on whether
to go ahead with the project, the
regulator has finally decided to
recommend the establishment of a
tape to the European Commission.
That’s right folks, following a
number of industry-led efforts
over the years which have tried
and failed to supply a consolidated
tape, 2020 could finally be the year
the dream is realised.
A real-time, electronic data
stream aggregating post-trade
86 // TheTrade // Winter 2019
reports, the consolidated tape
has topped the wish list of
market participants for many
years. The idea behind the tape
is to create a more integrated
European equities market, with
access to a consolidated view of
trade transparency information
including ISINs, price, volumes,
transaction times, and the relevant
venues. However, should plans
move forward the task at hand is
indeed monumental.
The biggest challenge is in the
data; after all, the tape is pointless
if the data is inaccurate. So, in
order to establish an effective tape,
ongoing issues with quality, timing,
consistency and completeness of
data, particularly for OTC and
systematic internalisers, must be
solved. ESMA has recommended
standardisation of reporting by
trading venues and APAs and
the use of mechanisms to reduce
reporting errors in a bid to combat
this.
ESMA will also recommend
mandatory contribution of data
from trading venues and approved
publication arrangements (APAs)
free of charge, with possible plans
to include mandatory consumption
of the tape to spur revenues, which
the consolidated tape provider
would share with the reporting
entities.
There’s a long way to go, but
this is more than a step in the
right direction. Consolidated
tape efforts in Europe have been
thwarted in the past by concerns
on data quality and the commercial
benefits of producing it, and the
latest consultation has certainly
moved to ease some of those
concerns. But the details must be
ironed out before the hard work
of producing the ‘holy grail’ of the
European equities trading truly
begins.
ESMA, concluding its
recommendation, acknowledged
the scale of the task at hand:
“The establishment of an EU-
wide real-time consolidated tape
is a technically demanding task
which will require a substantial
investment of both time and
resources by all parties involved,
including the need to change the
legal framework.”
What are your thoughts on the consolidated tape?
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