Across the industry, appreciation of the benefits the fixed income consolidated tapes for the UK and EU may reap is widespread, however for experts speaking at FILS on 16 October, some uncertainty still remains.
A particular point of apprehension lies with the aggregation of data, reiterated speakers, with fears regarding poor-quality data being pushed through the tape and risking delivering little to no benefits for the industry still present.
Speaking on this, one expert said: “For the buy-side, it’s the quality of data that is fundamentally important. If we end up aggregating bad data, this entire process would have been for nothing. [The industry] relies on clean, accurate data to feed through in all processes and deliver best outcomes for end clients. That needs to be firmly looked at.”
Discussions also called on regulators holding data contributors accountable for the quality of data coming in “from day one,” and ensuring regular data quality reports are provided, emphasising the vital nature of governance in the delivery of the tapes.
“Governance is incredibly important. We want to make sure that this tape is governed by a variety of actors and not just one particular entity of interest being voted for,” said one speaker.”
“We want sell-side, buy-side and the end investor to be part of their construction and for there to be some kind of feedback loop on what we’re getting.”
Realising the potential
The premise of tapes in both the EU and UK of course offers a multitude of opportunities, with a key benefit related to democratising access to the fixed income world and opening up investor interest.
“What I like about the tape is that it will be available to everybody,” enthused one panellist.
“Some investors that are not as naturally interested in fixed income, like retail for instance, find more interest as a result of having a tape and having access to the data that they cannot see today. This democratisation of data will also allow to give scale.”
Read more: The consolidated tape – getting the show on the road
Moreover, as global fixed income markets become increasingly competitive, the role that a tape can play in elevating Europe and the UK on the international playing field was a further benefit emphasised at the conference.
“In the EU and the UK, competition is taking place at global level. When investors look at Europe, they also look at the US and APAC, and those markets have been incredibly innovative,” affirmed one speaker.
“For Europe as a hub, it’s very important that these windows we’re going to present to the world are clean, appealing and attractive, so that investment and issuance can come our way.”
Demonstrably, though concerns around certain aspects of the two tapes remain prevalent within industry discussions, the benefits are also widely recognised.
For the panellists at FILS, early engagement between market participants and providers, imbued with a sense of collective responsibility is the key to achieving the success the industry hopes for.