While the EU-level discussions on the construction of an EU consolidated tape continue, there is growing optimism for a UK consolidated tape with a Financial Conduct Authority (FCA) consultation expected in July. 

This follows the UK government’s commitment to have a regulatory regime for a UK consolidated tape in place by 2024 as part of the Edinburgh Reforms.

What is a consolidated tape?

A consolidated tape will collect market data, such as prices and volumes across the market for selected asset classes and disseminate them in a standardised, single feed.

Benefits of a consolidated tape 

An appropriately modelled and fairly licensed consolidated tape will accrue multiple benefits to market participants.

• Enabling both retail and institutional investors to have a reliable and transparent view of prices and liquidity in one centralised place, improving their ability to assess whether they have achieved best execution outcomes.

• Widening access to market data and broadening participation in UK capital markets. Attracting more domestic and international investment which will in turn deepen liquidity and strengthen international competitiveness.

• Improving market resilience by continuing to offer a view of markets in instances where a venue experiences an outage.

Principles that should underpin a consolidated tape framework

To progress our advocacy on this topic, in 2021 we set up the Consolidated Tape Policy Group consisting of subject matter experts in our member firms, who formulated detailed recommendations for a viable UK consolidated tape framework, a few of which are briefly set out below.

A single provider per asset class

A single provider per asset class to enable one golden source of information. To this end, we welcome the FCA’s recent decision to consult based on a single consolidated tape provider model for bonds, in line with our representations.

Real time data

To deliver the anticipated benefits of a consolidated tape and to make it commercially viable, data should be disseminated as close to real time as technologically and commercially viable. A bonds consolidated tape should include post-trade data only due to lack of use of bond pre-trade data whereas an equities tape should include both pre and post trade data.

Mandatory data contribution

There should be mandatory contribution of data free of charge by all venues and Approved Publication Arrangements (APA’s) to the consolidated tape.

An effective governance framework

A governance framework that enables both the buy-side and sell-side to make representations to ensure that important decisions such as pricing and licensing are reflective of users’ interest.

Timeline for the expected regulatory initiatives[1]

The FCA is expected to prioritise establishing a post trade consolidated tape for bonds (followed by a tape for equities). The scope of an equities tape is yet to be determined and is likely to be included for discussion within the FCA’s planned discussion paper.

• July 2023: planned consultation paper from the FCA on the regulatory framework for a bonds consolidated tape and a discussion paper on equities in July. At present, rules for consolidated tape providers are primarily set out in Regulatory Technical Standard (RTS) 13, Data Reporting Services Regulation (DRSR) and the FCA Market Conduct Handbook (MAR). It is likely that the FCA will consolidate these with appropriate changes in the FCA MAR handbook.

• Q3 2023: It is likely that HMT will issue a Statutory Instrument (SI) in Q3 2023 amending the current DRSR in line with its commitment to have a regime for a UK consolidated tape in place by 2024. We expect this SI to grant powers to the FCA to run a tender process for the selection of a consolidated tape provider.

• December 2023: Planned publication of the FCA policy statement and final rules.

• 2024: Once the rules for a bonds consolidated tape are finalised, we expect the FCA to publish a tender document for the selection of a consolidated tape provider in 2024.

• Mid-2025: Taking into account the time needed by the FCA to select a provider through a tender process (approximately six months) and then to authorise it, we anticipate that the earliest timeline for the emergence of a bonds consolidated tape provider will be mid-2025.

Other related initiatives:

• March 2023: The findings of the FCA’s Trade Data Review will also inform the design of consolidated tapes  in the UK.

• Q4 2023: The FCA’s consultation for a fixed income transparency regime must be completed before a bonds consolidated tape becomes operational.

We look forward to engaging with the FCA and other industry stakeholders as this initiative evolves. Please[AW1] [DB2]  contact Avanthi Weerasinghe and Ali Campbell if you would like to know more about UK Finance’s work relating to this important initiative.