Europe's consolidated tape for stocks went live on Monday, giving equity investors a single feed that aggregates activity from the region's many exchanges and trading venues. It displays the best bid and ask available across the market, but it does not identify which venue those quotes came from. More detailed information becomes available to traders after a transaction has taken place.
In a joint appeal on Wednesday, five associations asked the European Union to deepen the tape so it reveals where quotes originate. The signatories were the European Banking Federation, the European Fund and Asset Management Association, the Association for Financial Markets in Europe, the European Principal Traders Association, and the Managed Funds Association. They also pressed lawmakers to stop debating rules that steer where trades should occur and instead focus on making liquidity easier to see.
The groups said, "A truly high-quality tape would provide a single view of trading and liquidity across EU markets." They added, "By making dispersed liquidity more visible, it supports informed execution decisions and will make European markets more accessible and attractive to global investors." Alongside venue transparency, they asked Brussels to limit what exchanges can charge for market data and to streamline clearing and settlement for securities such as stocks and bonds.
Europe's stock exchanges are pushing back, arguing that growth in non-exchange trading platforms and systemic internalizers has contributed to a drop in new listings and to perceptions that Europe is less liquid than the US. Systemic internalizers are banks that execute client orders against their in-house inventory.
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Brussels is working through the Market Integration and Supervision Package, or MISP, a broad set of reforms to streamline Europe's capital markets. The Commission's original plan includes upgrades to the consolidated tape, and the final package still needs agreement from the European Parliament and EU member states. Translation: the tape's design is still in play, and any change that makes liquidity clearer or data cheaper could influence how easily you track or trade European names.
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