A consolidated tape in fixed income trading remains an unlikely development in Europe in the near future, despite the industry’s continued desire for one to be established.
The subject has been prominent during panel sessions this morning at the Fixed Income Leaders Summit in Amsterdam, alongside the challenges in consuming and analysing the increased amount of data bond traders are now faced with.
Stephane Malrait, global head of market structure and innovation for financial markets at ING, told delegates that without regulatory intervention, the launch of a consolidated tape in fixed income is unlikely to happen any time soon.
“Nobody wants to create a consolidated tape for the industry under the current regulation. It won’t happen for some time unless there is some kind of regulatory or political intervention to ease what the consolidated tape providers need to do,” he said. “Every multilateral trading facility (MTF) and systematic internaliser interacts differently, and if we don’t force some kind of harmonisation in collecting data then we are not going to succeed. But there is no incentive for providers to cooperate at the moment.”
Gherardo Lenti Capoduri, head of Market Hub at Banca IMI, agreed with Malrait adding that as there is still no consolidated tape in Europe for equities, it is a distant dream for fixed income. He also stated that the reporting mechanisms under MiFID II, including the APAs and ARMs, are not working as efficiently as they could under the current market structure.
“The APAs and ARMs are not working properly. I strongly believe that the buy-side, sell-side and software vendors have to work together to solve the problem of data, which is the most important challenge for us. We need to manage, distribute and analyse data, and at the same time, the famous European consolidated tape is a dream at the moment,” Capoduri said.
Allianz Global Investors’ global head of trading, Eric Boess, also raised the issue at the conference during a keynote interview with MarketAxess’ chief executive Rick McVey. Boess expressed frustration with regulators in Europe who have not made any meaningful decisions on the issue of data consolidation, specifically the lack of a consolidated tape for fixed income data, which has resulted in a “reports in RTS28, which are pretty much useless, because no-one can read them.”