“Based on initial findings, no technical barriers or adverse development costs have been identified,” the Netherlands’ market regulator AFM observes in a fresh evaluation of an ambitious feasibility test that it hosts in its innovation hub.
If trading venues across the EU would all be quick to publish all the fixed-income trades (as is the practice in the US), market participants would get a consolidated view of the market and benefit from improved liquidity in total. This is the logic behind the idea of providing the union with a “consolidated tape” – “CT”, for short.
Now the AFM, together with market participants, hope that progress will be made as the European Commission soon publishes its review of the Markets in Financial Instruments Regulation (MiFIR).
“The AFM has identified four overarching CT use cases that underline how a CT can provide wide-ranging benefits to a wide variety of markets participants,” it writes in a press release about its assessment of consolidated tape for the European fixed income market. These four use cases are headlined …
• Level the playing field and foster the CMU
• Enabling EU-wide reference pricing
• Improving the quality and resilience of public markets, and
• Increasing the means for performance and risk management.
“As a next step, the AFM would welcome further work on CT prototypes and industry engagement on data standards and governance. Initiatives for other asset classes are particularly encouraged to apply,” the AFM adds.
In a post with data and analytics provider Clarus Financial Technology, its blogger Chris Barnes weighs in behind the Dutch regulator’s proposals.
“A consolidated tape for derivatives using European Transparency data is eminently possible, if only we were allowed to use and access the data,” he writes.