EFAMA has long been an advocate of a consolidated tape for Europe’s capital markets. We have published a paper arguing that the tape represents an urgent and much-needed reform of Europe’s fragmented capital markets. We support and applaud the European Commission’s improvements to the tape included in its Market Integration and Supervision Package (MISP). As an industry, we are very clear on the ways in which the tape would be used and how this would ultimately result in deeper, more liquid capital markets, as well as a more active and better-informed retail investor class.

In the MISP, the European Commission has proposed two key changes to the pre-trade Equity and ETF tape. Both these enhancements are critical, in our view, to the take-up and success of the tape, namely that pre-trade data should include venue attribution and 5 layers of data. We urge policymakers to implement these changes now and not in 2031, to enhance the attractiveness of EU capital markets and improve the viability of the tape.

We fundamentally believe the tape will have a major net positive impact on all market players, including asset managers, broker-dealers, other liquidity providers, and stock exchanges. The use-cases that we have identified for a pre-trade tape that includes venue attribution and 5 layers of data center around:

• Retail investor behaviour – the European retail investor would have a full market view and be empowered to assess and challenge the prices obtained by their broker. Over time, a better-informed retail investor can demand access to any trading venue across the EU, thereby also improving cross-border flows.

• Global demand for EU ETFs – ETFs remain the fastest-growing investment asset class in Europe. Yet EFAMA experts agree that only a fraction of global investor demand is captured today. Publishing full market data for the fragmented ETF market would boost global investor interest.

• Small and mid-cap stocks – European small and mid-cap stocks are under-represented in ETF baskets, but this could change with the availability of comprehensive, cross-venue data.

Improvements in the above areas would, without a doubt, increase trading volumes and investment flows into European equities and ETFs, growing capital markets. Any potential revenue dislocation for data providers would be small and dwarfed by the increase in capital market activity. We urge policymakers to prioritise the competitiveness of EU capital markets when assessing the MISP and the conditions to make the consolidated tape a success.

Susan Yavari, Deputy Director at EFAMA, commented: ”In the current legislative package, the European Commission has zeroed in on  critical improvements to the consolidated tape just ahead of its launch.  With so much riding on the successful delivery of a CT for Europe, we call on policymakers to endorse these changes with immediate effect.’’

Source: EFAMA