By Thomas McHugh, Co-Founder and CEO of FINBOURNE, and Vincent Grandjean, Founder of Propellant Digital.
The bond market is regarded by many as the bedrock of our global financial system, supporting everything from corporate financing to government spending. But the integrity of the asset class is under serious threat, not from volatility or macroeconomic challenges, but from something far more fundamental – poor data.
As UK and EU bond markets prepare for the introduction of the consolidated tape (CT) for fixed income, a system designed to centralise bond transaction data, it’s vital we address some glaring issues. Without doing so, the CT’s potential to improve transparency and liquidity, not to mention investor confidence, could be severely undermined.
Our analysis of over 155 million transaction records from 2023 to 2024, conducted in partnership with AFME, BVI, EFAMA and UK Finance, found a number of errors that distort the true picture of market activity. Missing transaction details, wild discrepancies in notional amounts, and conflicting classifications of bonds, all raise serious questions about the reliability of the data underpinning the bond market.
One of the most concerning issues uncovered was the replication of transaction data. This is not just a technical glitch, it could be a symptom of deeper problems in how data is collected and might be provided to any consolidated tape providers. In some cases, data grabs at trading venues repeatedly capture both new and old transactions, artificially inflating the number of trades and clouding the real picture. Up to 11% of transaction records we analysed required “de-replication” before they could be used. This kind of inefficiency makes it practically impossible for investors to thoroughly assess liquidity and risk.
Additionally, essential transaction fields such as price, notional amounts, and trade dates were frequently missing. In early 2024, two-thirds of records lacked critical currency information, while around 25% of transactions omitted quantity details. For institutional investors who rely on this information to make informed decisions, these gaps are cause for concern. They don’t just complicate financial reporting, they actively distort market data, potentially leading to poor investment choices.
So, what does all this mean for the EU consolidated tape? In theory, the CT has many benefits. By aggregating core market data into a centralised system, it has the potential to provide a real-time, comprehensive view of bond market activity. This could improve liquidity, increase transparency, and make European capital markets more attractive to global investors. However, without addressing the fundamental issue of inaccurate data, the CT could fail to deliver on its promise.
This is because if the data fed into the CT is unreliable, the system won’t just be ineffective — it will actively harm market participants by leading them astray. That’s why we need immediate action to address this, and regulators must prioritise a full audit of existing databases like FIRDS and FITRS before the CT goes live. Data standards must be enforced consistently across all venues, and transparency measures should be introduced to ensure that errors are identified and corrected in real time.
Ultimately, while the success of the EU CT for fixed income hinges on the technical platform, the quality of the data it processes must be readily distributable. If we fail to fix these issues now, the CT will be an elegant system built on a foundation of sand. The bond market, and the investors who depend on it, deserve a system constructed on a bedrock of quality data.
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