Paper on the Tape of Record for Equity, Equity-like Instruments, and Fixed Income

What is the situation in European financial markets with regard to market data?

The EU trading landscape is highly fragmented, with increasing amounts of trading taking place in the dark. Trading has become more fragmented under MiFID II and the market share of lit venues has decreased.

These trends have resulted in an extremely fragmented ecosystem for investors. In view of this, there is a need for a reliable consolidated view of trading in Europe, as foreseen in the Capital Markets Union (CMU) Action Plan. FESE acknowledges that comprehensive consolidation is not yet available, especially when it comes to systematic internaliser (SI) and over-the-counter (OTC) data. In order to enable consolidation, the inconsistent reporting of SI and OTC trades must be addressed. Correct, reliable, and consistent flagging of transactions is key to delivering a CT in the first place.

Investors should be able to get a full overview of the market and know where their orders are executed. But against this background, policymakers should also ensure that the market structure is fit for purpose, i.e. promote transparency in financial markets. A CT is not to be seen as a substitute for an adequate market structure. The role that lit markets play in delivering the CMU, as well as the importance of the price formation process, are also key factors to be taken into account in this debate.