Liquidnet’s David Everson welcomes UK FCA’s idea for consolidated tape in fixed income

Rick Steves

“The prospect of both an EU and a UK consolidated tape will be extremely interesting to data hungry systematic/algo type houses. Real time trade prints and better pre/post trade data will also very likely accelerate further the electronification of Fixed Income markets.”

The UK Financial Conduct Authority yesterday announced a proposal to set up a consolidated tape (CT) to help strengthen the UK as a global and vibrant financial center.

A consolidated tape combines multiple sources of trading data into one stream of information. The FCA intends to run a competitive tender process to appoint a single CT provider for bonds (and later for equities).

By building a more complete picture of the market, a CT is expected to reinforce the UK’s position as a leading center for the listing and trading of bonds.

Very likely to accelerate further the electronification of Fixed Income

Naturally, the FCA announcement has sparked reactions, namely from the fixed income segment. David Everson, Head of Trading, Fixed Income EMEA at Liquidnet, welcomed the innovation as a move toward transparency and electronification of fixed income, but noted that a Fixed Income CT will not solve all pain points overnight.

“It makes sense that the UK would prioritize a Fixed Income consolidated tape first as the asset class has traditionally been much more opaque than, for example, equities. It will be interesting to see how this progresses.

“The objective of having a regulatory framework in place by 2024 may be a little optimistic. These things tend to take much longer than expected to execute. The market will undoubtedly welcome the additional transparency that a consolidated tape may bring, particularly if it helps to drive down the cost to trade which, it could be argued, is increasing.

“However, a Fixed Income consolidated tape will unlikely solve all the pain points overnight. The US has had TRACE for some time, yet suffers from similar obstacles around price transparency.

“The prospect of both an EU and a UK consolidated tape will be extremely interesting to data hungry systematic/algo type houses. Real time trade prints and better pre/post trade data will also very likely accelerate further the electronification of Fixed Income markets.”

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