The Financial Conduct Authority (FCA) has proposed the creation of a consolidated tape in a bid to increase the competitiveness of the UK market.
The UK watchdog is working with the government – as part of its Edinburgh Reforms – to implement a live consolidated tape by 2024.
The FCA plans to create a consolidated tape for bonds first, which will be run by a single provider, before creating one for equities, however, plans are currently “less developed” for this asset class.
A consolidated tape is designed to provide investors with a more complete picture of trades within an asset class by combining data from multiple venues including exchanges and over-the-counter platforms.
Sarah Pritchard, executive director of markets at the FCA, said: “By providing a single, authoritative, complete and affordable source of market data, the consolidated tape should reduce trading costs, increase liquidity and allow investors to better assess their brokers’ execution quality.
“The establishment of a consolidated tape for bonds in the UK provided by a single consolidated tape provider will reduce the cost of and increase the access to market data for end-users.”
Adam Farkas, CEO of the Association for Financial Markets in Europe (AFME), welcomed the decision to create a tender for a single independent consolidated tape provider for each asset class.
“This is a welcome step as it will help to ensure that associated data costs remain as low as possible, while addressing the current fragmentation of post-trade transparency data,” Farkas said. “A single consolidated tape provider will also be easier for the official sector and industry to monitor.”
The announcement comes a week after the European Council and Parliament agreed to establish a consolidated tape for equities and ETFs that publishes data “as close as possible to real-time”.
The consolidated tape will include market data from all trading platforms such as exchanges in order to provide investors with “up-to-date” transaction data for the whole of the European Union.
Jim Goldie, head of EMEA ETF capital markets at Invesco, said: “It would have been great to see the EU consolidated tape go one step further to include venue attribution, which would have maximised the utility of the tape.
“This is hopefully something we will see addressed by the UK consolidated tape proposals, as venue attribution is incredibly important to provide transparency to investors around which venues are displaying best execution at a given point in time.
“Additionally, similar to the EU’s consolidated tape, it will be incredibly important to see ETFs included alongside equities in the UK version.”