LSEG has cautioned against introducing a pre-trade consolidated tape for equities in the UK, warning that if designed incorrectly, it may weaken the UK market, rather than strengthen it.
In a recently published article, Julia Hoggett, chief executive of the London Stock Exchange and head of digital and securities markets at LSEG, argues that efforts from the Financial Conduct Authority (FCA) to address liquidity fragmentation, such as exploring the introduction of a pre-trade consolidated tape for UK equities, would only be effective if all market participants contribute.
Currently, the FCA is expected to publish a pre-trade tape tender for UK equities in the next few weeks.
Specifically, Hoggett makes reference to a ‘free-rider’ problem, which allows participants to see prices on the tape, but without the obligation to share their own prices and data.
She comments: “It is a little like playing cards with someone who wants to see what everyone else is holding but keeps their own hand close to their chest. This is sometimes framed as an argument about protecting an incumbent; in reality, it is an argument about preventing a framework that lets some participants use transparency without contributing to it.”
In particular, Hoggett points to firms such as systematic internalisers (SIs), which may benefit from a potential tape without adding their own data, leading to reduced transparency.
Read more – SI flow important for a successful consolidated tape, say experts
Moreover, the article also goes on to argue that the FCA should address four key issues prior to launching a pre-trade tape, specifically around broad participation on the tape, operational resilience, protection against latency arbitrage and revenue sharing.
Supporting these proposals, Hoggett adds: “Public policy and regulation must recognise that there is a risk to market integrity, and ultimately to the national interest, if innovations like a pre-trade tape are not introduced within the right framework. It is also the case that introducing a damaging framework and assuming that any breakage to the system can be corrected afterwards may be playing fast and loose with market integrity.”
Additionally, she goes on to suggest: “If the FCA is not prepared to proceed with caution and protect market integrity, it may be essential to ask the Government to step in instead.”
Industry response
Following the article’s publication, industry bodies such as the Association for Financial Markets in Europe (AFME) have come forward in response to Hoggett’s proposals.
Specifically, AFME’s reply argues that introducing a post-trade-only tape may “risk overlooking what the market actually needs”, and that full transparency within UK markets requires a pre- and post-trade solution from launch.
“The focus should be on outcomes, including improving access to high-quality data, supporting effective price discovery and ensuring investors benefit from competition – not on preserving current models,” AFME affirms.
Read more – AFME backs FCA UK equity consolidated tape framework consultation
Despite this, the industry body also makes reference to Hoggett’s argument around Sis, questioning that value of including these quotes in the tape, highlighting that these quotes are already publicly available and free of charge.
Discussions around this topic differ however, and at a recent panel at TradeTech in April, buy-side experts agreed that SI flow in the consolidated tape and having this data contribute to public price discovery for better transparency was not just beneficial, but in fact essential.
Supporting this, Jim Kaye, executive director of FIX, explained in November 2025: “Today, investors assessing the European market will completely discount up to one-third of volume because of the way trades are reported […] activity taking place off-venue, for example in systematic internalisers, is discounted, whereas in the US is it counted and accounts for almost half of the entire market.”
As debate over the FCA’s decision to potentially include pre-trade data in a UK consolidated tape intensifies, what will transpire as this landscape continues to evolve will likely remain firmly in the spotlight for many across the industry over the coming weeks and months.