The Association for Financial Markets in Europe (AFME) has welcomed the Financial Conduct Authority’s (FCA’s) framework for a UK bonds consolidated tape (CT), responding to the FCA’s recent consultation paper.
AFME members have expressed their support for a UK CT, which the association states is a reflection of broader industry opinion. By offering timely, good quality data through a resilient and cost-effective CT, access to a common view of the UK market will be more available to investors. In turn, it says, this will improve the global competitiveness of UK retail markets.
There are a number of points that AFME highlights as important to consider during the establishment of a CT.
It states that the CT should be sold under a simple, single market data licensing framework that covers several use cases, with specific definitions of re-use and direct use of data. Additionally, a standardised user licence will encourage data access through an authorised CT provider.
The association goes on to say that a balance must be found between operational capacity and the cost to users, and that operational costs must be aligned with low cost of access and transparency. This will ensure that useful products are available to the market, and will help to broaden access to market data.
In terms of governance, AFME advocates for a consultative committee, with a rotating membership representing users and data producers across the market. This group would meet regularly to advise and offer recommendations to the CT provider.
Finally, pre-trade data should be real-time, continuous and available to five levels of book depth with full attribution in order to allow the CT to be commercially viable and function effectively. This will also ensure that it can perform well when compared to equivalent mechanisms in other jurisdictions.
Victoria Webster, managing director of fixed income at AFME, says: “The establishment of a CT for bonds in the UK is a major milestone. The UK has a leading global market and it is vital to ensure that it remains competitive by widening access to market data and broadening participation in capital markets from investors, both domestically and internationally.
“At the same time, even an appropriately constructed consolidated tape will not fully address the current unacceptably high cost of market data. We trust that the FCA’s extensive work on wholesale data will help address anomalies in this area, which are detrimental to financial markets and their users.”
