There’s been a lot of talk recently about a consolidated tape – most notably the London Stock Exchange Group’s (LSEG) strident critique of the FCA’s plans.
Adam Farkas, David Postings, Chris Cummings
LSEG has put forward one point of view, which is out of step with the views of other parts of the market, including banks and investors.
A consolidated tape may sound technical, but the idea is simple and it’s something investors, asset managers and banks support. What it would do is bring together information on share prices and trades from across all UK trading venues into one single, easy-to-access feed.
By contrast, today’s system is fragmented and often expensive, making it harder for traders to see where shares are trading and at what price.
The overarching aim is therefore to make markets more transparent, more competitive and, crucially, deliver better outcomes for all traders, including retail investors.
After years of delay, the UK is close to making this a reality and that’s why there is noise about the issue now.
So as the debate moves towards how to build the tape, it is vital not to lose sight of what really matters: outcomes for investors.
LSEG has suggested that the UK should start with a limited version – a post-trade tape that shows only completed trades. But this is shortsighted and risks deprioritising the needs of investors.
To understand why, it helps to think about how markets work. Prices are not just set when trades happen, they are shaped beforehand by the prices buyers are willing to pay and sellers are willing to accept. This “pre-trade” information is what allows investors to judge value and decide when and where to trade.
A tape that excludes this would be like trying to understand the housing market by looking only at completed sales, without seeing asking prices. You would get part of the picture, but not enough to make fully informed decisions.
A post-trade-only model risks locking in today’s fragmented system rather than improving it, which is not in the national interest.
A more complete approach, bringing together both pre- and post-trade data, would give investors the full picture from the outset, and is one step towards democratising access to market data. It would also ensure the UK keeps pace with international developments, with the European Union already moving in this direction, while the US has had a tape for decades.
At its heart, this debate is about competition and fairness. Better access to high-quality data can lower barriers, open up markets to more participants and help investors get better outcomes when they trade.
There is strong support across the financial services industry for the FCA’s efforts to finally introduce a consolidated tape. But settling for a halfway solution would be a missed opportunity.
The UK has a chance to build something that genuinely improves how its markets function, something that works for investors, not just existing structures.
Because in the end, investors do not need part of the picture. They need the full one.