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Consolidated Tape for Europe

CESR is now consulting with the industry about what approach should be taken to improving market transparency across the EU.  In summary, it would prefer to have an industry-led approach, but if the industry doesn’t respond quickly and appropriately then CESR will impose a solution on the industry.  The impression is that “quickly” means “in the next few weeks”.

At a meeting of market data managers and leaders in London last month, out of around 100 people in the room only about 10 said that they had people working on this issue.  Maybe the industry has become so inundated with operational and regulatory changes that the right people aren’t seeing the wood for the trees – the old story that when you’re up to your neck in alligators, you forget that you’re there to drain the swamp.

I’ve only been around financial market data for the last twenty-five years of my career, but my summary would be that the EU Consolidated Tape topic is going to be the largest single change in the market data infrastructure of the EU that any of us is likely to see in our career.  It’s going to bring changes to market data contracts, market data pricing, market data administration, data distribution and data collection and IT throughout banks, brokers, investment managers and data vendors.  It’s also going to get the industry focusing more on standards for market data than ever before.

This is a big topic in the MiFID Forum, with AFME and the major banks joining in the discussion.  Are you assuming that surely somebody else in your organisation must be working on this? Are you feeling lucky?  Or do you think that it might be time to pay some attention to this particular regulatory alligator before it turns around and bites you?


Comments: (3)

A Finextra member
A Finextra member 08 October, 2010, 08:00Be the first to give this comment the thumbs up 0 likes

Chris - are you prepared to speculate on how a consolidated tape might be set up?

Brennan Carley
Brennan Carley - Proton Advisors - New York 08 October, 2010, 13:17Be the first to give this comment the thumbs up 0 likes

Interesting that the EU is starting to move towards a consolidated tape around the same time that many US traders have shifted away from the consolidated tape to direct exchange feeds.


On the plus side, the move in the US towards consuming direct exchange feeds has contributed to the growth of commercial off the shelf technology to aggregate and process exchange data.... i.e. once upon a time it was difficult and expensive to build a ticker plant, now you can buy them in (fast) boxes off the shelf. 

A Finextra member
A Finextra member 08 October, 2010, 13:34Be the first to give this comment the thumbs up 0 likes

I think that the key questions today are around governance of the organisation and systems that will deliver a consolidated tape result.  It's not yet clear generally about what the output of the tape would be intended for, eg would it replace direct feeds from exchanges and MTFs or would it be an additional data service in parallel?  There would be major differences in architecture between a solution that, say, was aimed at providing the "best execution" low-latency price that you could trade against electronically and a solution that produced prices in "good time" that could be used for, say, matching off large quantities of retail orders or valuing portfolios.

In terms of moving to a consolidated tape, we don't know yet if this is a move away from direct feeds in Europe or not.  Again, it will depend on what the data in the consolidated tape is intended for.  A big difference between Europe and the US market is that Europe is a lot of different countries and national financial centres, ie geography and international politics.  If the "source of all data" is located in London or Paris or Frankfurt, one would have to expect 30-40 other financial centres and a couple of thousand investment firms in other countries to complain about this.

Market participants will need to watch the changing landcsape development and make their plans as it changes. If you wait until the game is over to see what the result is - the game is over! 

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