10.16.2013

BATS Chi-X Moves Toward Consolidated Tape

Bats Chi-X Europe is launching an expanded pan-European trade reporting service which could be a first step towards a consolidated tape for all equity trades in the region.

“As the industry looks ahead to the implementation of new reporting requirements with MiFID II, we see pan-European reporting services as a natural extension of our business,” Mark Hemsley, chief executive of Bats Chi-X Europe, said in a statement. “With BXTR we now offer one-stop, full-service trade reporting solutions, which will enable our customers to lower their costs and improve efficiencies in several areas, including settlement netting of trades that are off book.”

The European Commission’s Markets in Financial Instruments Directive was introduced in 2007 to lower trading costs by allowing new venues to compete with national exchanges. In the US the DTCC provides real-time post-trade data from the all of the country’s trading venues,. In contrast there is no comparable centralised data available in Europe to allow institutions to easily compare execution quality across the region.

However the upcoming MiFID II requires the creation of  a consolidated tape.

“We believe BXTR is a first-step in the comprehensive reporting of post trade-data which is not part of the real-time lit and dark order books. There is a long way to go in the process but we believe this is a significant starting point and will provide us with the platform to pursue a more influential stance with the regulators to push forward with the consolidated tape for both pre and post-trade data,” a Bats Chi-X  spokesman told Markets Media.

The COBA project, a commercial attempt to create a pan-European consolidated tape, collapsed in March this year.

A Bats Chi-X  spokesman said: “A commercial solution will prove extremely challenging given the significant revenues exchanges derive from selling their data. There is no incentive for them to change behaviour without some regulatory review.”

The exchange believes BXTR could attract new customers as data will be included in the exchanges market data feeds without increasing market data or trading fees in 2014.

A Bats Chi-X spokesman said: “We believe there are opportunities for brokers and fund managers to re-assess the use of real-time data and that there are operational areas in these organisations who can use the full new data set as a basis for displacing expensive real-time exchange data.”

BXTR expands the exchange’s existing trade reporting service by allowing pre-negotiated trades to be bought on-exchange and centrally cleared and netted. A Bats-Chi-X spokesman gave the example of a client being able to send one trade report for processing and clearing Spanish put throughs, helping them avoid the separate brokerage, trading and clearing fees charged by the Madrid exchange.

Last week Bats Chi-X Europe announced another strategy to gain share with the launch of a listings business next month through the cross-listing of two BlackRock exchange-traded funds.

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