[ I N D E P T H | C O N S O L I D A T E D T A P E ]
The UK The Financial Conduct Authority ( FCA ) is awaiting feedback from the market on the framework for a fixed income tape , following its distribution of a consultation paper ( CP ) earlier this year . A prior market consultation found that the development of a CT for fixed income markets should come before equity markets , given the former ’ s lower levels of standardised data .
The FCA currently has no detailed guidance as to reimbursing data contributors . In the recent CP it is made clear that the proposal is not to oblige trading venues ( TV ) and approved publication arrangements ( APA ) to provide data , without comment yet around incentives to do so .
Speaking to The TRADE , Nathaniel Lalone , a partner at Katten Muchin Rosenman who advises both sell- and buy-side firms active in the OTC derivatives , futures and securities markets , praised the FCA ’ s overall
62 // TheTRADE // Q3 2023
“ A single CT per asset class provides a ‘ golden ’ source of truth and can act as a focal point for the resolution of data quality issues .”
THE UK FINANCIAL CONDUCT AUTHORITY
approach : “ I think the FCA has been taking a very sensible , data-driven , economics-driven approach as compared to the EU approach of juggling competing political interests , which does not lead to optimum outcomes .”
Additionally , looking at the absence of empirical guidance in terms of incentivising contributions , Lalone added : “ They seem to be leaving it open to the bidders to build a solution that makes economic sense . They ' re leaving it up to the market to figure out a way of striking the right economic balance .”
Europe In Europe , a CT looks set to come to fruition next year with the European Commission echoing the UK ’ s sentiments , having previously asserted that fixed income is the most needed and most achievable asset class when it comes to a consolidated tape .
The most recent EU proposal suggests a real-time pre- and post-trade consolidated tape per asset class , with data from all trading platforms included and a model that will reimburse all data contributors – placing a greater emphasis on data quality .
In February , the European parliament announced that “ the market data contributor should at least receive a remuneration based on the costs it has incurred in generating the data and providing it to the CTP ( consolidated tape provider ).”
In Europe , the previously established process required CTPs to enter into licensing agreements with each separate