Proposals to create a consolidated tape of post-trade data in Europe require reworking so that they accurately reflect the needs of the buy-side community, according to vendor Thomson Reuters.
“The current regulatory approach to create multiple tape providers that compete to offer an all-encompassing tape may not deliver what the Commission or the industry is looking for,” Andy Allwright, head of compliance, Thomson Reuters, told theTRADEnews.com.
The initial draft of MiFID II presented by the European Commission (EC) in October last year favoured a commercial approach to the creation of a consolidated tape based on pre-defined standards set out in the legislation. Ensuring data is of a sufficient standard prior to consolidation would be the responsibility of approved publication arrangements (APAs), new entities created by the directive. MiFID II also proposed a mandated and call for tender option.
While Allwright is supportive of the APA regime and efforts to improve the quality of data, he stated market data users do not need a solution that includes all European markets. Instead, they would rather receive data which has been filtered to meet their specific needs, such as by market or sector.
While buy-side traders already receive customised data solutions from vendors which meet their specific needs, there is a chance that after MiFID II, such solutions will not fall under the revision legislation.
“The regulations are too prescriptive and don't really allow data providers to take account of the commercial needs of their customers. We could get to a situation where consolidated tape solutions that market participants actually need are not officially recognised by MiFID II,” said Allwright.
According to Allwright, MiFID II’s consolidated tape proposal only requires tweaking so that it is better suited for the needs of market participants.
European policymakers’ approach to establishing a standardised consolidated tape has also come under fire for not being substantive enough. Market participants have expressed concern that the commercial approach will not yield sufficient progress.
“The competing providers proposal is essentially no different to what we have faced over the last five years, where regulators were waiting for an industry-led solution,” Richard Semark, head of European client trading and execution relationships at UBS, told theTRADEnews.com in June. “It’s unlikely we will solve all the problems without one body that is mandated to do this.”
The EC’s draft of MiFID II is currently undergoing separate readings by the European Parliament and Council of the European Union. The two bodies will then be required to agree on a compromise text, with input from the EC, before MiFID II is finally adopted in 2014-15.