UK FCA wants to set up a consolidated tape for bonds and equities
“We are adapting our rules to make sure the UK market works well, providing certainty for firms and so providing a good environment for investment. The new consolidated tape will help reduce trading costs, increase transparency and improve data quality. Our other measures announced today aim to further support the UK’s thriving financial services sector”.
The Financial Conduct Authority, UK’s financial watchdog, has announced a series of measures to help strengthen the UK as a global and vibrant financial center.
For starters, the FCA is proposing to set up a consolidated tape (CT), which combines multiple sources of trading data into one stream of information.
FCA to run competitive tender process to appoint single CT provider for bonds
A consolidated tape is expected to increase transparency and access to trading data by lowering its cost and improving data quality for market participants.
Bonds would be the first asset class subject to a consolidated tape. The FCA intends to run a competitive tender process to appoint a single CT provider for bonds. 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.
The FCA will consult on further reforms to bond and derivative transparency requirements later this year, with the aim of creating a simpler and more effective regime that will enhance the content and delivery of trade data in UK markets alongside the CT.
After a successful run with a consolidated tape for bonds in the United Kingdom, the FCA would then double down on its efforts toward more transparency and data quality by adding a CT for equities.
Sarah Pritchard, executive director of markets and executive director of international at the FCA, said: “We are adapting our rules to make sure the UK market works well, providing certainty for firms and so providing a good environment for investment. The new consolidated tape will help reduce trading costs, increase transparency and improve data quality. Our other measures announced today aim to further support the UK’s thriving financial services sector”.
FCA announces guidance on trading venue perimeter and support for expanding firms
The FCA is also supporting wholesale markets and wider competitiveness by providing guidance on the trading venue perimeter and support for firms expanding into and across the United Kingdom.
To further support innovation and the development of new technologies, the FCA has issued guidance addressing queries that market participants have made to level the playing field and let firms know when they may require authorization as a trading venue. The guidance will come into force in October 2023.
Building on its existing support for new entrants to financial services, the FCA is launching a new pre-application support service (PASS) for overseas wholesale firms and their advisers wishing to expand into the UK, firms already in the UK but planning to set up in the devolved nations and outside the south-east, and those with innovative, complex or high-risk business models. The service, starting in July, will see more support such as pre-application meetings and the opportunity for FCA speakers to talk about the wholesale firm authorization process at industry events, roundtables, and conferences.