Brussels rejects exchanges’ call for 15-minute delay on record of trades

Brussels has rejected a proposal from European exchanges to install a 15-minute delay to a record of equities and debt trades, stressing it wants to see a near real-time system to attract more retail investors to capital markets.

Officials from the European Commission on Thursday said a planned “consolidated tape” — a live database containing basic trading information — would need to help investors find the most competitive prices for their deals, as well as offering them protection.

The strong rejection comes as lobby groups make their final cases to policymakers ahead of the publication of planned reforms to Europe’s capital markets by the end of the year. Europe is keen to reboot the creation of a central database as part of a raft of measures to make its own markets more attractive to international investors.

Policymakers have long seen similar tapes for shares and bonds in the US as a model to boost liquidity. A previous attempt to get one off the ground, through the 2014 Mifid II markets rules, foundered because the rules did not make it commercially viable for private companies. The European Commission hopes to have a beta version ready by 2023.

But two senior policymakers publicly rejected a proposal earlier in the week by management consultancy Oliver Wyman and commissioned for Fese, the exchanges lobby group, which said investors were best served by a 15-minute delay to trades information on equities and related exchange traded funds.

John Berrigan, the Commission’s top financial services official, said a delay would not help investors find the most liquid places in the market to trade “at all”.

“We’re talking about nanosecond tapes here, we’re talking about a tape that delivers within seconds but not within minutes,” he told a virtual event hosted by Fese.

He acknowledged that Britain’s departure from the EU was influencing the Commission’s thinking on its policies. The UK has kicked off a review of its own capital markets post-Brexit and has proposed to make some changes to its rules, including the creation of its own consolidated tape and allowing more trading to take place away from exchanges.

“Brexit has had major implications for the remaining Capital Markets Union 27 capital markets. We are behind competitor markets in terms of development, there’s no doubt about that,” said Berrigan. “The UK is going to be a very proximate competing market and a very big one and we must keep an eye on what they are doing. What we do in the Commission is set frameworks and let markets evolve as they wish.”

Tilman Lueder, head of the Commission’s securities markets unit, said the tape was not for high-frequency traders “but for everybody else to see, as quickly as possible”.

The Oliver Wyman report did not address issues such as access to real-time data from exchanges, he added. “Our conclusion is that on the basis of current licensing practices, it will be impossible to build a consolidated tape.”

Berrigan said the Commission’s proposals on reform of its capital markets were likely to come in late November.

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