By Anne Plested, MCSI, Senior Product Manager for Regulation, ION Markets.
The realization of consolidated tape has been long-awaited for equities trading in the UK and the European Union (EU). With the European Commission (EC) adopting the enabling technical standards on 12 June and the European Securities and Markets Authority (ESMA) launching its search for an equities tape provider, the finish line could be in sight. But what is it that has slowed down progress so far? The original scope for a consolidated tape, proposed by the regulators over 15 years ago, was for a single source of post-trade data. Now, the picture looks more complex. The pieces are gradually falling into place, but we aren’t quite there yet.
A winding history
The idea of a European tape was first mooted in 2010 within the context of MiFID. Since then, the wheels have been turning, albeit at a gradual pace, towards its creation. It wasn’t until 2018 that MiFID II first called for consolidated post-trade data to be available for all EU instruments (including those traded off-exchange). Rather than participants consolidating this data from numerous sources themselves, the data would be available as a single consolidated tape. Better data quality has always been a prerequisite for any tape and represents one of the main challenges and costs of implementation.
ESMA undertook an extensive review of MiFID II and MiFIR from 2019 to 2021. Among other things, this review considered the cost of market data and a consolidated tape while setting out proposals to remove obstacles to its creation. The EU Capital Markets Union Action Plan, updated in 2020, also included a consolidated tape as an objective. The goal is to support the creation of a true single market, by creating a pan-European “single point of truth” for local and international investors and improved price transparency.
Where are we now?
The regulatory focus in 2025 is on economic growth and improving efficiencies in rulemaking. But it is unlikely this will mean a substantial row-back on regulation and a “bonfire of red tape”. Regulatory change in Europe is typically slow-moving, with proposals, consultations, and decisions taking years.
That said, the EU MiFID II Review has reaffirmed the desire for a consolidated tape in EU markets. MiFID II continues to evolve with a series of revisions and consultations aimed at refining and enhancing the framework, with the establishment of a consolidated tape as a key focus.
In 2010, at the start of its journey, the tape was all about post-trade data. Now, the EU tape is looking to include both pre-trade and regulatory data to inform the status of systems matching orders and the trading status of individual financial instruments. Further harmonization of data reporting standards will also be required to improve data quality.
In December 2024, ESMA published several anticipated Final Reports (FR) as part of the MiFIR Review. The amendments came into force on 28 March 2024 and will apply from 29 September 2025. They included a series of regulatory technical standards (RTS), the first of which mandated increasingly prescriptive details around the publication of pre-trade data in preparation for the EU equities consolidated tape. The RTS 2 changes focus on tidying up the remaining aspects of non-equity transparency. Up to now, no application date has been formally proposed, aside from it being ahead of the bond consolidated tape, which makes sense.
The EC has now started to adopt the various related technical standards; on 12 June, it adopted those to enable the creation of consolidated tapes. Together with the ESMA launch on 20 June of their first selection procedure for the Consolidated Tape Provider (CTP) for shares and exchange-traded funds, this demonstrates that the pieces are starting to come together. CTP applicants can now refer to the adopted RTS, which will be used, in part, as the basis for the assessment of some criteria. ESMA intends to make a decision on the selected applicant by the end of the year.
The UK market is forging its own path. For now, the FCA has been assessing whether a post-trade data-only tape is sufficient. At the end of 2024, the UK regulator published the results of an independent review conducted by European Economics (EE), and a comprehensive update on its progress and next steps. The EE study of 42 market participants found that post-trade data is seen to fulfill many use cases for consolidated data, such as aiding in investment return benchmarking, broker performance evaluation, and ensuring market participants have a consolidated view. However, many respondents also believed that including pre-trade data is necessary to reap the full benefits from a consolidated tape and ensure its commercial viability. The FCA has committed to publishing a consultation paper on an equities CT framework by the end of 2025.
Looking ahead
Wheels are certainly in motion, and consolidated tape is heralded as the solution to provide full transparency and reduce the cost of market data. The question remains: with all the vested interests in the equities world, will the tape deliver on those aims?
Market participants are following the progress. It will be interesting to see how they respond when it becomes a reality, though this is still some way off. Investors lack confidence when they can’t see liquidity to unwind positions, and the tape spells hope, as it’s expected to help simplify market data visibility and depict liquidity.
Progress may be slow, but with the search for an EU tape provider taking place this month, we are closer than ever to a conclusion. Even after 15 years, the discussion and debate around creating a consolidated tape for equities is as energized as ever. But, with no great understanding of the demand for a consolidated tape or its use cases, it may take a few more years for any equity tape to materialize. Market participants will have to wait a while longer to see progress materialize across each jurisdiction in 2025 and beyond.
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