LONDON (Reuters) - The European Union’s securities watchdog said on Thursday that stock exchanges should be forced to contribute prices to a pan-European feed for trades to make it easier for investors to compare prices on different platforms.
Market users like asset managers and banks should also be forced to contribute to funding costs for the feed, or ticker tape, the European Securities and Markets Authority said.
The EU has long sought to copy the United States and have a “consolidated tape” (CT) that lists in real time stock prices traded on upwards of 20 platforms and exchanges across the bloc, making it easier for investors to spot the best prices.
Previous efforts to create a tape foundered after disagreements on how much exchanges could charge for data, making a tape commercially unviable.
ESMA, which has powers to appoint a tape supplier, said EU securities rules known as MiFID II had failed to cut the cost of stock market data for users like banks and asset managers.
“Moreover, as no consolidated tape has materialised, ESMA recommends the establishment of a European Union wide real-time consolidated tape for equity instruments,” ESMA said in a statement.
Banking trade body AFME said it welcomed ESMA’s recognition that the overall price of market data had risen and that pricing was not typically based upon the costs of producing and disseminating the data.
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ESMA said the tape should be based on mandatory contribution of price data from trading platforms, with revenues shared among contributors.
The “long and complex process” for creating a tape would require legal changes and take five years to “go live”, it said.
London is the EU’s biggest share trading centre but Britain is due to leave the bloc in January.
“ESMA is of the view that an EU27 consolidated tape would provide added value after Brexit, even though the value of a CT would be higher if it included UK data,” the watchdog said.
Asset managers want cheaper stock market data to help them meet requirements under MiFID II to show investors they are getting the best deals.
Exchanges have hit back, saying they are not gouging users with high data fees, but ESMA signalled it would look further into the issue given that MiFID II requires market data to be made available on a “reasonable” commercial basis.
ESMA said a consolidated tape would “limit to some extent” the market power of trading platforms when selling real-time data on executed trades.
“Access to market data is becoming increasingly important for securities markets and it is important that data users know what they are paying for,” ESMA Chair Steven Maijoor said.
“ESMA will therefore provide further guidance on the cost of market data.”
Reporting by Huw Jones; Editing by Sinead Cruise and Mark Potter