European policymakers are working on ways to break the deadlock with stock exchanges and encourage them to share their highly prized trading data. One potential solution: pay them. Over this summer, EU officials are reviewing how data on stocks and bonds is disseminated, in response to concerns among fund managers that trading information is too disjointed and expensive to help them measure trading costs and performance.
Some investors feel let down by rules introduced last year that were designed to inject more transparency into the process. Allowing exchanges to share in revenues from a centralized pot of data is a potential path forward for the European Commission, according to two people involved in the discussions.
Many investors complain the tougher Mifid II standards for financial markets have failed to improve their ability to see all trading see activity across Europe’s fragmented markets. Transactions are scattered across dozens of separate national exchanges and other trading venues, each with slightly different ways of publishing information on flows, transaction sizes, and prices. Brokers, fund managers, banks and brokers have also complained that data costs have risen, just at the time they are obliged to gather more information.
Now, the EU’s executive arm, advised by data provider IHS Markit, is considering whether to create a single, near real-time record of trade prices, known as a consolidated tape, for equities and bonds. Mifid II mandates that Europe has one, but policymakers privately acknowledge the rules are open to interpretation and may require a tweak to encourage adoption.