ESMA requirement to create a process for selecting consolidated tape providers

MiFID II/MiFIR proposed the idea of putting Consolidated Tape (CT) providers into place, platforms which would provide consolidated data on prices and volume of traded securities in the EU. Since MiFID II/MiFIR was introduced however, applicants have struggled to meet the criteria necessary to obtain authorisation to act as an official CT provider.

The MiFID II/MiFIR review has highlighted that the CT provider regime therefore requires overhauling. Obstacles preventing prospective CT providers from gaining authorisation will be removed and ESMA will run a competitive selection process where a single entity will be appointed as a CT provider for each asset class (shares, ETFs, bonds and derivatives). Some of the steps proposed to achieve this target are;

1.      Trading venues, systematic internalises and other investment firms, and approved publication arrangements will be required to provide trade data to CT providers free of charge
2.      Trade data provided to CT providers will be in a harmonised high-quality format, allowing for cost-efficient consolidation of that data
3.      Commercial incentives to become a CT provider will be improved

The introduction of CT providers will improve price transparency (and therefore competition) across trading venues, assist market participants in analysing liquidity and improve investors’ ability to evaluate the quality of execution of their orders. Get in touch with @Investment Solutions Consultants if you require assistance with the implementation of changes to MiFID II/MiFIR.