Share trade archive would slash investor costs, study for EU says

LONDON (Reuters) - A pan-European Union record of stock and bond trades would cost 11 million euros (£10.02 million) to build and save investors billions, a study commissioned by the bloc said on Wednesday.

A record, known as a “consolidated tape” or CT, would collate prices and volumes of shares and bonds traded on multiple platforms to help investors make better decisions, and provide regulators with improved data to spot market abuses.

Past attempts at creating a tape have stumbled over pricing data, with banks accusing platforms of charging rip-off prices for feeds that would make a tape uneconomic, a view rejected by exchanges.

The EU’s European Commission executive said last month it would propose legislation in a year’s time to create a tape for share trading, long a feature of Wall Street, to help deepen the EU capital market.

“There is high demand for CT data and the benefits of delivering the data clearly outweigh the cost of implementing it,” the study by The Market Practice consultants said.

The bloc’s European Securities and Markets Authority (ESMA) should select and regulate a single tape provider as a not-for-profit utility, the study said.

Initially, it could track prices and volumes at which stock and bond trades were executed, and include bids and offers from brokers later on.

Setting up a tape would cost 11 million euros, funded by a one-off joining fee for data aggregators like exchanges, the study said. It was impossible to quantify total benefits but market users say they currently rely on “sub-optimal” data, which bumps up costs.

Annual running costs would be 7-9 million euros, funded by membership fees of about 16,000 euros a year on each data aggregator, the study said.

The data should be provided free to the tape, with contributors getting a slice of the revenues on sales to professional investors, with free access for retail investors, it added.

(CT Graphic - )

Reporting by Huw Jones; Editing by Kirsten Donovan