The European Fund and Asset Management Association (EFAMA), the European Forum of Securities Associations (EFSA) and other industry participants have renewed their push for the creation of a consolidated tape following the publication of a new European Commission-backed study into its benefits.
Based on the input of 200 data stakeholders, the study, conducted by Market Structure Partners, recommended the European Commission should use its regulatory powers to create an exclusive consolidated tape provider.
It found the barriers to its creation were not technological but based on legal, organisational and economic challenges that could be “overcome” if the consolidated tape was run by an ESMA-backed entity.
“It is impractical to expect multiple competing commercial consolidators of data to emerge at this point of the market’s evolution,” the study said. “This is because the underlying data that needs to be consolidated resides across many competing commercial entities, some with disproportionate economic leverage and conflicts of interest.”
In response, EFAMA and EFSA said they “welcomed” the study adding the creation of a consolidated tape would help to build deeper and more open capital markets in Europe.
“We look forward to engaging with the Commission and regulators over the coming months to address the challenges relating to the development of a consolidated tape,” they added.
Its creation has been at the top of the agenda for many market participants for a while. The lack of consolidated tape in Europe means investors are unable to see the true liquidity of an ETF.
In May, EFAMA called on the European Commission to address this issue as part of its response to the Commission’s consultation on MiFID II.
Shane Coveney, partner at Dillion Eustace, told ETF Stream the biggest barrier to its creation was the cost element.
“The market has been looking for a consolidated tape for a number of years,” Coveney continued. “We are not that far away now.”
Meanwhile, Optiver also weighed in following the release of the study arguing a consolidated tape provider should be formed by legislators and regulators in order to ensure the information is democratised for all investors at a low cost.
“We firmly argue in favour of a consolidated tape as we believe that investors and the capital markets are best served through the delivery of a low cost, real-time consolidated tape of all transactions executed within the European Union,” the firm added.