Europe Markets, Data Vendors Reach Deal on Stock-Trade Data
April 07, 2011, 8:22 PM EDTBy Nandini Sukumar and Nina Mehta
(Updates to add information about cost differences in Europe and U.S. in 10th paragraph.)
April 8 (Bloomberg) -- European securities exchanges agreed to standards on what kind of data to include when reporting stock transactions, a step toward unifying regional trading information in a project called the consolidated tape.
The rules will be implemented in regulated markets and on alternative venues known as multilateral trading facilities in Europe, according to a statement from the Federation of European Securities Exchanges. The plan, called a market model typology, will make it easier to integrate data from those platforms with over-the-counter trade reports.
Developing a consolidated tape is part of an overhaul of European trading regulations adopted in 2007 to spur competition among venues, the Markets in Financial Instruments Directive, or MiFID. Regulators are seeking to create a data feed that shows the price and volume of individual stock trades and where among dozens of venues they occurred.
“This is a crucial first step in defining what trade information is going to be reported,” said Thomas Jordan, president and chief executive officer of Jordan & Jordan, a New York-based company that specializes in securities industry information and compliance issues. “It gets consistency among the major players about that information.”
Reuters, Bloomberg
The initiative was led by the Federation of European Securities Exchanges, which represents 46 securities bourses; London Stock Exchange Group Plc; and data vendors such as Thomson Reuters Corp and Bloomberg LP, FESE said in its statement yesterday. Bloomberg LP is the parent company of Bloomberg News and competes with Thomson Reuters in selling financial and legal information and trading systems.
Agreeing on common standards is a precursor to deciding how to provide consistent information about trades through a consolidated tape to asset managers, brokers and other market participants. Unlike in the U.S., Europe doesn’t have a system that aggregates and publishes the information.
“Post-trade information published by different venues and through different sources needs to be brought together,” Judith Hardt, Secretary General of FESE, said in the statement. “Our standards will allow market participants to consolidate the information published by our members more easily.”
Brokers and other companies currently compile the data themselves and may choose to get information from different combinations of venues, giving them incomplete views of trading activity. That affects the trading decisions and strategies brokers and asset managers employ.
Pan-European Trading
“This would help people in the market get a fuller sense of pan-European trading,” said Justin Schack, managing director in charge of market structure analysis at Rosenblatt Securities Inc. in New York. “Right now, a lot of firms have to put together consolidated feeds on their own and that can be time- consuming and costly.”
The European Commission said in a December report that because so many venues publish data, it costs traders about 500 euros ($715) a month per computer terminal for data fees and other costs to calculate consolidated prices for stocks. In the U.S., the comparable cost is about 70 euros. The commission said it may consider mandating that trade data be available to the public at no charge after 15 minutes.
The group proposed three alternatives for a consolidated tape in its December report. One would be similar to the U.S. model in which an authorized entity runs the tape, providing data “on a reasonable cost basis.” Another would allow a vendor to operate the system and charge users “on a reasonable commercial basis.” The third option would allow competing commercial providers to provide a consolidated tape.
“Option C seems to be having some traction now,” Jordan said, referring to rival consolidators. Agreeing to common standards helps firms that favor that model, he added. “The good news is there will be something in the marketplace that will assist the regulators in accomplishing some of their MiFID goals,” he said.
--Editors: Chris Nagi, Nick Baker
To contact the reporters on this story: Nandini Sukumar in London at nsukumar@bloomberg.net; Nina Mehta in New York at nmehta24@bloomberg.net
To contact the editors responsible for this story: Nick Baker at nbaker7@bloomberg.net; Andrew Rummer at arummer@bloomberg.net
