As proposals for a consolidated tape (CT) for equities and bonds in Europe continue to be debated, industry body EFAMA (European Fund and Asset Management Association) has released a statement calling for a real-time CT for equities, to include both pre- and post-trade data.
The creation of a CT was originally proposed in MiFID II as a single price comparison tool consolidating data across the EU. The goal was to assist market participants in analysing market liquidity and increasing investors’ capacity to evaluate the quality of execution of their orders. Since then, although there has been much discussion on the topic, no formal agreement has yet been reached on the exact form the CT will take.
Earlier this year, an industry group consisting of EFAMA, AFME, BVI and Cboe Europe, published a position paper outlining a set of 11 key principles needed to ensure the successful creation of an EU Equity CT. In its latest statement, EFAMA stresses that a real-time CT is critical for the success of the Capital Markets Union (CMU), the EU’s initiative to create a truly single market for capital across the EU.
“The availability of real-time data, before as well as after trades, is critical in driving the activities of capital markets participants,” comments Keshava Shastry, Global Head of Capital Markets at DWS, the German asset management company. “Without it, we would have inefficient allocation of capital. A real-time tape also enables more accurate risk and liquidity management. This is especially important in volatile times, where we want to make the best decisions on the market through the best information. In order to remain competitive and form a strong capital market union in Europe, we must provide investors with a real-time tape.”
These concerns are echoed by Tanguy van de Werve, Director General of EFAMA. “Industry has been working over the last 2 years to help design a viable framework for the consolidated tape,” he says. “If the use-cases for market participants on real-time data (as opposed to 1-minute or 15-minute delayed data) are not compelling enough, you would think that policymakers would be fearful of the longer-term risks of failing to produce a viable tape, and the missed policy objectives. For me it is clear that the democratization of data, the global competitiveness of our CMU, and the increased transparency for all investors groups, including retail, hang in the balance. I hope that these negotiations will ultimately yield a commercially viable tape that users will want to purchase.”
EFAMA’s statement expressed further surprise that real-time data delivery should even be contested, given that industry’s position has been recognised and supported by the European Parliament on this topic, and by the European Commission proposal itself.
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