The bumpy road to creating a consolidated tape

Key Takeaways

• After 15 years, discussion and debate around creating a consolidated tape for equities are as energized as ever.
• ESMA is pushing ahead with its plans around selecting an equity tape provider and promises authorization in the first half of 2026.
• The FCA is moving ahead in 2025, working with the industry to finalize the potential design features of a UK equities tape.

The road to a consolidated tape (CT) for equities in the UK and the European Union (EU) has not been easy. The wheels have moved at a gradual pace, but is the industry now approaching some sort of home stretch? As the European Securities and Markets Authority (ESMA) unveils the final stages of its plans to achieve its goal, is a pan-European ‘single point of truth’ for investors in its sights? Meanwhile, in the UK, the Financial Conduct Authority (FCA) is delving even deeper into the details to understand the true use cases and costs before agreeing on the best way forward.

The slow pace of progress is not surprising given the disparate nature of the EU landscape, variety of trading venues and competing interests. Aside from the main stumbling block in the EU around quality of market data, the complexity surrounding market data licensing policies has posed a challenge to consolidation. The region has a multitude of data providers, each with its own proprietary data feeds and reporting standards.

Starting out

The idea of a European tape was first mooted in 2010 within the context of MiFID. Back then, the EU Commission (EC) review of the original 2009 MiFID proposed one of three options for a consolidated tape of post-trade data:

1. Operated by a single, non-profit seeking entity, established and appointed by a legal act.
2. Operated by a single commercial entity, appointed by the EC following a public tender (subject to retender after a limited period).
3. Operated by competing commercial providers, approved by competent authorities.

Once fully formed, MiFID II called in 2018 for consolidated post-trade data to be available for all EU instruments (including those traded off exchange). Rather than participants consolidating this data from numerous sources themselves, the data would be available as a single consolidated tape. Better data quality has always been a prerequisite for any tape and represents one of the main challenges and costs of implementation. So, regulators intervened to improve post-trade information. For example:

• MiFID II introduced new APA and consolidated tape provider (CTP) entities.
• ESMA promised to develop common formats, data standards, and technical arrangements, to streamline post-trade data consolidation. It also took steps aimed at reducing the cost of post-trade data for investors. These steps included the unbundling of pre- and post-trade data, and introducing a then-named European Consolidated Tape (ECT).

Alongside regulation to improve the quality of post-trade data, the industry came together in 2010 to develop the Market Model Typology (MMT). MMT introduced a standard set of codes for post-trade data, making it easier for market data to be compared and consolidated. The MMT industry standard maps legacy trade (reporting) flags to a common code. MMT has gained industry support and broad implementation over the past 15 years.

Yet still no tape

Moving on, ESMA undertook an extensive review of MiFID II/MiFIR from 2019 to 2021. Among other things, this review considered the cost of market data and the consolidated tape. It also set out proposals to remove obstacles to creating a tape. A parallel driver was the EU CMU Action Plan, which included a consolidated tape as an objective in its capital markets union (CMU) action plan. The goal is to support the creation of a true single market, by creating a pan-European ‘single point of truth’ for investors, improving price transparency.

The MiFIR Review amendments entered into force on 28 March 2024. They advanced a single tape per asset class, and mandated all trading venues and APAs to submit core data to the CTP – although some concessions are made for smaller venues. The core data includes post-trade, pre-trade, and regulatory market data, which relates to the status of systems matching orders and the trading status of individual financial instruments. There is also further harmonization of data reporting standards to improve data quality. Generally, the changes require revisions to delegated acts or to RTS (regulatory technical standards) and ESMA has been busy drafting these. In December 2024, ESMA submitted to the EC a final report of detailed rules applicable to CTPs regarding data quality and reporting, revenue redistribution, and authorization.

Are we nearly there yet?

Fast forward to today and plans for the EU tape, one in each asset class, have finally started to solidify as part of the MiFID II Review’s implementation stage. The impetus has also grown against a backdrop of shifting macro-economic and market dynamics. At the beginning of 2025 saw ESMA launched a selection process for a bond tape provider. The search will begin for the equities (and exchange-traded funds) tape provider in June, with the final selection in early 2026.

Is the UK CT roadmap any smoother?

Meanwhile, the FCA is forging its own path in the light of Brexit. For now, the FCA is still assessing whether a post-trade data only tape is sufficient. The jury is still out on the potential for including pre-trade data.

At the end of 2024, the UK regulator published the results of an independent review conducted by European Economics (EE), and a comprehensive update on its progress and next steps.

The EE study of 42 market participants found that post-trade data is seen to fulfill many use cases for consolidated data, such as aiding in investment return benchmarking, broker performance evaluation, and ensuring market participants have a consolidated view. Many respondents also believed that including pre-trade data is necessary to reap the full benefits from a CT and ensure it is commercially viable.

However, the FCA recognizes that views on the inclusion of pre-trade data in an equities CT are polarized. Aiming to publish a consultation paper later this year, it is working closely with the financial industry in 2025 to understand better the true demand and use cases for a real- time pre-trade tape and the potential impact on price formation. The watchdog will also focus on the cost-benefit of an equity CT.

“Before we determine a position for consultation, we consider that there is more work we need to do with industry to fully assess the likely demand for an equity tape with these permutations in data, considering the strength of the associated benefits and scale of the related costs” the FCA said in its update.

Conclusion

The original scope for a consolidated tape, proposed by the regulators over 15 years ago, was for a single source of post-trade data. The UK FCA is currently examining the impact, demand, costs, and benefits of shifting the scope to include pre-trade data. The EU scope has widened significantly to include post-trade, pre-trade, and venue/instrument status data. In the interim years, many regulatory interventions have been made to improve the quality of post-trade data, and there are proposed new standards around pre-trade data. Under MiFID II, venues are required to submit data to the tape providers. All the pieces are gradually falling into place. We are not there yet, but inching closer. It will be interesting to see how the tapes in each jurisdiction progress through 2025. While many would like the wheels to be set in immediate motion, there are still potholes ahead. It may take a few more years for any equity tape to materialize.