FCA’s consultation period for UK consolidated tape closes with market expressing key considerations ahead of its development

AFME lists key considerations to take on board around the establishment of a UK consolidated tape as the FCA’s consultation period, set out in July, closes on Friday.

Earlier this year, the UK’s Financial Conduct Authority (FCA) announced a consultation period with market participants on reforms to improve markets and competitiveness, including the introduction of a UK consolidated tape (CT).

The watchdog revealed that its initial focus will be on a single consolidated tape provider (CTP) for each asset class, to help ensure that associated data costs stay low while also addressing the existing fragmentation of post-trade transparency data.

A CT for bonds will be the initial focus, with an equities tape following at a later stage. The FCA also stated that it plans to run a competitive tender process for the bonds tape.

The FCA’s consultation – set out in July – provides its proposed framework for a CT for bonds, its criteria for how a CTP would operate, and the tender process for appointing a CTP.

Comments on this consolidation paper are expected to be received by 15 September, after which, the FCA stated it would make the necessary amendments to its handbook, with the aim to publish a policy statement in December 2023.

The development follows approval from the EU and Parliament earlier this year for a CT for the EU across all asset classes, alongside enforcing a general ban on payment for order flow with temporary member state exemptions.

Read more: European Council and Parliament reach milestone Mifid compromise on consolidated tape and PFOF

On Friday, the Association for Financial Markets in Europe submitted its response to the FCA’s consultation paper, welcoming the FCA’s initiative to embed the framework encouraging the development of a CT in the UK.

Echoing industry perspectives, AFME highlights that a resilient, cost-effective CT providing timely, good quality data will provide improved access to a common view of the UK market to all investors – while also enhancing the global competitiveness of UK wholesale markets. 

In AFME’s response to the FCA’s consultation paper, it highlights licensing, the tender process, governance and operating costs as the most pressing aspects to consider around the establishment of a CT.

“The establishment of a consolidated tape for bonds in the UK is a major milestone. The UK has a leading global market and it is vital to ensure that it remains competitive by widening access to market data and broadening participation in capital markets from investors, both domestically and internationally,” said Victoria Webster, managing director of fixed income at AFME.

“At the same time, even an appropriately constructed consolidated tape will not fully address the current unacceptably high cost of market data. We trust that the FCA’s extensive work on wholesale data will help address anomalies in this area, which are detrimental to financial markets and their users.”

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