The London Stock Exchange (LSE) has said it can solve the market data fragmentation problems that have plagued the buy-side community since the introduction of MiFID.
Speaking at the exchange’s interim results on Thursday morning, LSE CEO Clara Furse said the solution to post-trade data problems lie with the production of data and not its distribution. “If you put rubbish in, you get rubbish out,” she said.
Furse asserted that the European introduction of a US-style consolidated tape was “superfluous”, noting that consolidated post-trade data is already available through market data vendors such as Bloomberg and Thomson Reuters, as well as Proquote, the LSE’s real-time market data and trading terminal.
In the US equity markets, a consolidated tape of trades executed across all registered markets is used as a pricing benchmark. Buy-side traders, particularly in the UK, have complained of declining post-trade data visibility due to the fragmentation of the reporting of negotiated trades to multiple venues, following MiFID’s introduction last November. But Furse said that there is no need for a European version of the US consolidated because tools such as its own Proquote can provide a similar service.
“The solution to the problem is clear,” she said. “We provide a highly reliable, transparent and time-efficient trade reporting service for all European securities for a fee of 6 pence per trade at the point of production, and distributed at no extra cost.”
Furse also implied that double reporting could be a consequence of investment banks’ stakes in trade reporting platforms such as Markit BOAT. “It may be down to confusion, but there are new financial incentives to over-report,” she said.
The exchange claimed that the introduction of its new TradElect trading platform last year and a new maker-taker pricing structure in September had caused significant growth in high-frequency trading volumes. This method of trading now accounts for 30%, or £93 billion, of the exchange’s total trading, compared to 10%, or £12 billion, in 2005.
“High-frequency trading is having a considerable impact on our technology planning,” said Furse. “Strong demand for Performance Channels, which were introduced earlier this year, has been followed by even stronger demand for our hosting facilities – which allow firms to operate their black boxes from within our data centre, eliminating network latency from their trading activities.”