Members of the Federation of European Securities Exchanges (FESE), the trade body that represents 52 stock exchanges, have made a series of commitments to improve the quality of their post-trade data.
One of the commitments by the exchanges is to provide separate access to pre- and post-trade data at a “reasonable cost” by the end of the year.
Currently, most exchange groups including Nasdaq OMX and the London Stock Exchange, which is not a member of FESE, bundle their pre- and post-trade data together, which market participants have highlighted as a key barrier to creating an affordable source of consolidated post-trade data.
However, according to FESE, the focus by market participants on the cost of exchange data in the creation of a standardised consolidated tape is misplaced.
“Regulated markets are exposed to full competition in all areas of their business – and have considerably lowered their transaction fees, further reducing their share of the costs [which are] borne by clients,” read a statement from FESE. “The underlying problem with data in Europe is the lack of availability of pre-trade over-the-counter (OTC) data, and the lack of consistency, granularity and poor quality of post-trade OTC data.”
FESE recently suggested that the level of OTC trading is too high and not granular enough to provide regulators and market participants with sufficient visibility of off-exchange trading.
BurÃ§ak Inel, deputy secretary general at FESE, added that the trade body's latest efforts are intended to help increase the attractiveness of commercial solutions.
“The commitment to separate data is not based on any supposition that combined data is a hindrance to the creation of a standardised, cost-effective consolidated tape, rather a proactive gesture to aid the further development of existing commercial solutions,” she told theTRADEnews.com.
As well as the separation of pre- and post-trade data, all of FESE's members have committed to making their data free to the public and end users after a 15 minute period to and support industry-defined standardisation of the flags used to identify different types of trades in post-trade reports.
Since the introduction of MiFID in 2007, buy-side traders across Europe have called for the creation of a standardised consolidated tape. A consolidated tape would help them build a price picture for stocks that are now traded across multiple venues potentially at different prices. However, despite efforts from data vendors, a solid, standardised system has yet to materialise.
The Committee of European Securities Regulators (CESR), which aims for convergence across the continent's securities regulators, admitted in a recent consultation paper that a consolidated tape may have to be mandated.
CESR is currently working on producing a feedback document collating responses from market participants on its consultation paper. The feedback will be sent at the end of July to the European Commission, which will then start work on reforming MiFID, based on the recommendations.
However, FESE claims that regulatory involvement would hamper the ultimate goals of MiFID.
“In our view [implementing a US-style mandated consolidated tape or introducing pricing regulation] will not serve the objectives of improving transparency or lowering costs, and by contrast pose serious threats to the competitive framework that MiFID has enabled,” read the FESE statement.