The European Fund and Asset Management Association (EFAMA) published today a Blueprint for a European Consolidated Tape intended to permit greater certainty amongst investors as to prices, best execution, valuation and performance measurement, leading to further reductions in direct and indirect costs of trading for investors.
The liberalisation of trading venue regulation under MiFID has brought many benefits for market participants. However that proliferation of trading venues has exposed weaknesses in the regulation of data quality and aggregation. This in turn has led to great difficulties in determining with certainty market prices and volumes.
All market participants have a keen interest in good quality trading data and efficient mechanisms for data consolidation. However, Investment Managers not only need good data to ensure they are receiving best execution for their clients, but also in order to correctly value portfolios and funds they manage.
The inability of the market to offer efficient solutions has been frustrating, especially as the costs for data feeds have continued to increase. Data providers and aggregators have divergent commercial interests and data ownership is diffused, leading to less than satisfactory, expensive data consolidation offers.
Whilst it might be expected that market users would support a competitive commercial solution, this Blueprint is addressing a single official ECT. In part this reflects the absence to date of a comprehensive and enforceable solution. Commercial solutions may address many of these issues ahead of any imposed ECT but EFAMA expects that standards will still need to be set and supervised by the European Securities and Markets Authority (ESMA).
Commenting on the publication of these reports Peter De Proft, Director General of EFAMA, said: “MiFID II must improve data quality and aggregation provisions, imposing binding minimum quality standards for trade reporting and vigorously fostering data aggregation. EFAMA proposes a Blueprint for a European Consolidated Tape to contribute to the public debate on this crucial issue, and to provide buy-side input to the European Commission for the upcoming legislative measures.
“The investment management industry and indeed all market participants will greatly benefit from the appropriate strengthening of MiFID provisions on data quality and aggregation, but such measures can also contribute to the overall improvement of trading on Europe’s equity markets.”
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