Read all about it. Friday is registration deadline for candidates to running the EU’s incoming “consolidated tape” for bond market data; Norges Bank Investment Management is a backer behind one of them. Simultaneously, reports from a recent meeting at the Financial Conduct Authority indicate that the UK’s consolidated tape will take all the way until 2028 in the equities space – where exchanges and a large part of market participants form opposing sides in a hard battle. 

It can be hard to wrap one’s head around the consolidated tape plans. Further down, let us look into what they are and why they are so debated. Yet, the fact that a united European securities-exchange industry is both loudly protesting the idea of pre-trade data in it, and – at the same time – competing for the contract to operate it in the equities area, is an indicator that this arena is a more exciting one than could have been assumed. Some accuse the exchanges of trying to, effectively, kill the ambitions – by seeking to have their consortium EuroCTP to run the tape, only to then do it their own way. 

On Monday, the European Securities and Markets Authority (ESMA) posted a reminder of Friday’s deadline (7 January) for applications to become the Consolidated Tape Provider (CTP) for bond data in the EU markets. Just on the Friday before, Waters Technology reported strong indications that the UK plans to postpone the equities version of the consolidated tape in its own jurisdiction as far back as to 2028.

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Prices from across all venues 

Roughly speaking, the “tape” could be understood as an idea to tackle the fragmentation of Europe’s trading venue landscape, where it is hard to know what is the cheapest price I could possibly buy a security for right now. So, what if all the order books could be centrally combined into a consolidated overview of the hundreds of trading venues? That should make Europe’s limping financial market more attractive than today, when competing with those of America and Asia – or so goes one of the main pro arguments.

After all, it’s a solution in style with what the US has had since the 1970s. The EU’s plans were presented already 15 years ago now, in 2010, but are now increasingly read into the context of the vision for a Capital Markets Union (CMU), which has come to gain traction. 

Which tape, exactly?

Risk of confusion is added by the fact that there are three separate asset scopes, for which implementation timelines and solution providers could differ: fixed income (the bonds), equities, and exchange traded products. Add to this a hot debate of whether the tape should come in a post-trade-only version or include pre-trade orderbook data in near-real time (which is necessary for the trading use case lined out above). And then, on top, the separation between the EU and the UK. So, with three asset-class scopes, times two jurisdictions, it makes for six boxes that we may individually refer to or not whenever we talk about Europe’s consolidated tape. (The box terminology is referred to for example by Finbourne representative Neil Ryan in this The Desk article, which looks comprehensively at which firms aspire to operate the different consolidated tapes.)

Controversy has prevailed not least in the equities area – the area that the EuroCTP consortium of exchange operators seems most interested in managing. One clearly stated purpose for the EU is to see it “improve competition between trading venues”, an objective that the trading venues themselves could naturally be less interested in pursuing. The consolidated tape also exposes exchanges to risk of losing revenues from data flows for which they currently charge commercial prices but would be obliged to feed into the consolidated tape … to the benefit instead of the external operator who can then sell on the consolidated flow to users.

Euronext is one exchange actor who has published a brief of the arguments against the more ambitious versions of the consolidated tape, not least against the inclusion of pre-trade data around equities. One point is that the aggregate from all venues is illusive, as the market participant can still only take action at the select few where s/he is a client. The UK’s Investment Association cried foul last year when the London Stock Exchange Group published a paper that alledgedly misrepresented the association’s views.

The UK Financial Conduct Authority weighs pros and cons in papers including this one. The supervisor there repeats a 2023 observation that “[v]iews on the inclusion of pre-trade data in an equities CT are polarised. Given the importance of the attractiveness of equity markets in the UK for the wider competitiveness of UK wholesale markets we think that it is important that we have a very firm evidence base before making a judgement on whether or what pre-trade data should be included in an equities CT”.

Google, NBIM and UBS are team mates

In the area of fixed income securities (bonds) – which is the first asset class to see the consolidated tape implemented, an interestingly configured bidder presented itself in October. A group calling itself FairCT states that its members include “Cboe Global Markets, Ediphy Analytics, FactSet, Google Cloud, Norges Bank Investment Management, TP ICAP and UBS, among others”. Their information focuses on the bonds tape process, but their website also mentions the other asset classes. Another contestant in the bidding to operate the bonds tape, is Bondtape, a partnership between Finbourne Technology and Propellant Digital.

Cboe spent most of 2024 styling itself as a candidate in a joint venture with Aquis, an initiative that was dropped after Aquis was purchased by SIX, one of the exchange operators behind the 15-member EuroCTP consortium.