The Regulators have wanted an industry led Consolidated Tape, but it hasn’t happened. Neena Dholani, Global Marketing Programme Director, FIX Trading Community explains why.
Some of the reasons why Consolidated Tape providers have not emerged include the lack of financial incentive for running a consolidated tape, the overly complex and strict regulatory environment, competition among non-regulated entities such as data vendors, and last but not the least the lack of mandated clear and open data standards. All of these are significant hurdles that must be considered in order for a consolidated tape to be successful.
But nevertheless, one of the main objectives of MiFID II was to increase transparency and it is still immensely difficult for market participants to get a complete picture of trading across venues. Known as the ‘what, where & when’ conundrum it is now clear that regulators are definitely going to do something about the consolidation of European data. The debate today is more around the type of consolidated tape and ensuring how the industry comes together to implement some of the points raised by ESMA in their consultation paper released late last year.
So, what type of tape do we need? Should a consolidated tape service be real time pre and post trade data, a real time post trade tape of record, or an end of day tape of record? There are strong supporters for each of these three options but whatever the selected choice the application of open, clear and harmonised data standards is essential for successful implementation.
In order to address the questions surrounding data standards, the FIX Trading Community launched its Consolidated Tape working group last summer, to consider the data standards element of the Consolidated Tape consultation paper. Given the difference in the operation of the Equity and Non-Equity markets two groups were established. The working groups are focusing on Equity and Fixed Income cash bonds, but leveraging use cases and trade scenarios for each of the asset classes. The group’s objective is to look at where the existing data provides challenges for market transparency; then to work towards new technical flags of how the data should be identified to aid in the creation of a consolidated tape. We are calling on the industry, the buysides, sellsides, technology firms and venues to join us and get involved with this initiative. Read the full article here