2012 Review: Industry Takes Key Steps Towards EU Consolidated Tape

At the start of 2012, the Federation of European Securities Exchanges—in association with industry participants and data vendors—published version 1.0 of the Market Model Typology (MMT), a framework for standardizing trade flags across Europe as the basis for creating consolidated tapes of pan-European post-trade data. Despite the ongoing efforts of exchanges and data vendors to map to the framework, the lack of post-trade data standards and a viable commercial model for the tapes slowed progress during the year, leading to doubts that the market can achieve an industry-led solution as stipulated by European Commission at the end of 2011.

The European Commission was so concerned by the lack of progress that in its most recent draft of proposals for its review of the Markets in Financial Instruments Directive (MiFID 2), it added a caveat making provisions for a mandated tape, in case the industry-led solution does not lead to timely delivery of an effective and comprehensive consolidated tape.

Pan-European multilateral trading facility BATS Chi-X began charging for its market data from Oct. 1 (IMD, May 29). The fees were lower than other comparable venues to focus industry debate on what constitutes “reasonable commercial terms” for pan-European data, officials said. Nevertheless, some end-users were unconvinced that introducing new fees would help to drive down overall data costs in Europe—and after a year of little movement, the buy side remained largely skeptical of an industry-led solution.

However, in November the industry made two significant steps: The EMEA Trade Data Standardization Working Group of industry standards body FIX Protocol Ltd released official guidelines for standardized market data and trade reports (IMD, Nov. 26). Though not directly linked to the creation of a tape, FPL officials said the standards will make it easier for the industry to consolidate post-trade feeds. Work to encourage the adoption of the best practices, which leverage FESE’s MMT standards, will continue in 2013.

Next day, The COBA Project—an independent organization dedicated to the development of a European consolidated tape, co-founded by Mark Schaedel, former global head of market data at NYSE Euronext, and Graham Dick, former head of business development at Chi-X Europe—announced plans for the delivery of an industry-led consolidated tape including proposals for quote and trade data tapes and a commercial model (IMD, Nov. 27). Officials say COBA—which has put itself forward to administer revenues and data licenses—is not a public utility but rather a facilitator for implementation of the plans. Schaedel and Dick are currently soliciting commitment from key industry stakeholders in Europe including exchanges, data vendors and large buy- and sell-side firms.