In light of new developments around a potential consolidated tape provider (CTP) selection process expected to begin next year, Tim Whipman, head of business development at TransFICC, anticipates that modern interface technology, resiliency, and existing business continuity planning will be required when determining CTPs in each asset class.
Following successful technical talks on Mifir/d and the imminent release of final texts, it now looks like most of the Level 1 requirements for an EU consolidated tape have been agreed. Parliament should vote to pass this through in the coming weeks, paving the way for a consolidate tape provider (CTP) selection process at the end of next year.
Tim Whipman, head of business development at TransFICC
Many of the controversial issues debated by various fixed income stakeholders have been decided and co-legislators are likely to confirm that technology will be a key focus for determining who will be selected to be the single CTP in each asset class for an initial 5-year period. As of now, only two parties have confirmed publicly their intent to apply.
Over the past year, industry participants have been particularly focused on specific aspects of the bond tape, namely a fair deferrals regime to protect firms from having to divulge large size or illiquid trades and data quality, where an expert stakeholder group is expected to emerge to ensure the substance of market data.
Going forward, with the start of Level 2 discussions, we expect a shift of emphasis to ensure that any CTP selected, has the right technology to operate the tape. This requires modern interface technology, resiliency, and existing business continuity planning.
With this highly anticipated focus on technology, TransFICC has been running a bond CT pilot over the past year, hosted in AWS and utilising production infrastructure and APIs. We have had multiple market participants test contributing data and consuming data output via API – including banks, venues, and asset managers. In addition to aggregating publicly available data from the three largest APAs, firms have been able to stress test high throughput loads using their own and canned data.
What we learned from the technology pilot is that existing TransFICC infrastructure can support the expected throughput of post-trade messages required in Europe for all corporate and government bond trading, and other asset classes. In addition, there is no technical barrier in terms of latency to stop the real-time publication of trades.
The EU CTP is expected to be obliged to utilise existing transmission protocols offered by data contributors, unlike proposals for the UK Consolidated Tape. API normalisation and integration experience will be critical for any prospective CTP. Regulators are also intent on selecting a CTP which can deliver the tape on a reasonable commercial basis, with retail investors and academics having free access.
As we move closer to a bond CTP being selected, it is clear that the market needs increased competition (more than the current two interested parties) and that a cost-effective solution is a pre-requisite. By using existing hosting and infrastructure technology for post-trade data, this will support the delivery of a low-cost tape in terms of initial build and ongoing running costs. This would be in sharp contrast to many costly estimates that have been touted over the last year.