Exchanges sing different tunes on consolidated tape
varying business models came to the fore at a conference, with Nasdaq OMX
Nordic president Hans-Ole Jochumsen prioritising capital raising for SMEs over a
pan-European consolidated tape.
Speaking at the
European Exchanges Summit in London, Jochumsen said there was too little
institutional capital being invested in small companies. “That is Europe’s
problem; that is what we need to solve,” he told delegates.
consequence of new capital requirements under Basel III, banks are reducing
lending to SMEs. Jochumsen said exchanges have an increasingly important role
in the economy, giving SMEs access to capital, and as a result, creating new
jobs in the market.
“Whatever we do
in the next 25 years, banks will play less of role in providing risk capital to
people who want to create jobs,” he said.
Nordic launched First North in Stockholm specifically for SMEs in 2005 and has
since listed 106 companies, which have raised €400 million. Jochumsen said the
annual growth of jobs during that period was 36.6%, or 2,600 jobs. The exchange
will soon be launching First North Helsinki as well.
Jochumsen said Nasdaq
OMX Nordic’s business model is designed to focus on local needs, not
pan-European, while using the strengths of being part of a global group. As a
result, providing capital to SMEs was more of a priority than real-time price data
access across the whole of the European securities markets.
CEO of pan-European exchange BATS Chi-X Europe, told delegates market data was still
too expensive and the Markets in Financial Instruments Directive (MiFID) II
didn’t entirely address pricing.
we are seeing is that market regulators across Europe are starting to
understand the problem of the high price of market data.”
Hemsley said the
industry needs – a real-time pre- and post-trade consolidated tape, which
includes exchange-based and OTC trading.
year, the European Securities and Markets Authority said no major progress on a
consolidated tape could begin before MiFID II, which has hit the trialogue phase, is completed. MiFID II presents three options for establishing a tape including: a commercially-led solution; a provider selected via a call for tender process; or a single entity that would operate the tape as a utility.
In March, the
COBA Project, an industry-led solution to create a post-trade consolidated tape,
was suspended because of regulatory uncertainty.
Nordic’s Jochumsen was not in favour of having a consolidated tape similar to
that of the US, where trades are routed to the exchange with the cheapest
price, calling it a “subsidy”.
“If we want to
have a consolidated tape in Europe it needs to be built in another way, in my
view,” he added.
there would be a consolidated tape for post-trade today if market participants
were eager to make it happen, blaming delays on a lack of progress in the
regulation of off-exchange equity trading.
disagreed however, saying the creation of a consolidated tape could happen in
parallel to OTC changes.
and the multilateral trading facilities that currently contribute to all of
those market data providers have the mechanisms to produce a pre- and
post-trade consolidated tape,” he said.
“When we sort
out the OTC reporting, we can add it in, but it doesn’t need to happen in that