Europe’s trade body for the asset management industry has renewed the sector’s call for a single, mandatory electronic system that collates stock prices and other information across the continent, helping to drive down costs of trading.
The European Fund and Asset Management Association made the recommendation on 22 May, alongside a series of other suggestions to improve flexibility and transparency for investors, in its response to the EU’s ongoing review of Mifid II, its flagship markets regulation. The European Commission, the EU’s executive body, asked for feedback from industry on its review on 17 February.
Europe’s market regulator, which reports to the Commission, has already called for the creation of a single electronic system, known as a “consolidated tape”.
A consolidated tape would provide dealers with live information on the price and size of stock trades taking place on European exchanges and other venues. The creation of one was mandated under the EU’s revised Markets in Financial Instruments Directive, which was introduced in January 2018.
The European Securities and Markets Authority ran a consultation of its own on the topic last year, and Efama also made clear it backed the idea at that time.
In its 22 May statement Efama said: “Mifid II still fails to deliver a consolidated tape (CT) and the notion of ‘Reasonable Commercial Basis’ in data cost has been largely overlooked. Efama therefore call[s] on the Commission to enforce the creation of a consolidated tape.”
Despite industry pressure, the system has still not materialised and high-frequency traders, banks and asset managers continue to pay exchanges for this data, with many complaining that the charges are too high.
The debate over charging too much for is hot topic for exchanges across the world. Last year in June, Financial News reported that European competition regulators had investigated Nasdaq, the US-based exchange, and Spain’s Bolsas y Mercados Españoles over the issue.
Efama also recommended that investors should be allowed to opt in or out of certain Mifid II cost-disclosure and investor protection requirements. “Investors should either be allowed to opt out of many cost disclosure and investor protection requirements or should be out of scope, being allowed to opt-in,” the statement said.
Despite these suggested changes, the Efama said overall the Mifid II framework was “working as intended”.
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