Based upon the US experience the answer to what the four key pillars which establishes the consolidated tapes will have a major impact on its success and cost. Therefore, it should be no surprise virtually all the European Exchanges (ex UK) recently announced they have combined to set up a joint venture company to do the job for exchange listed securities, and a partnership of Bloomberg, MarketAxxess and Tradeweb for the fixed income equivalent.

There are four initial pillars that any participant must consider before the question of operation and management arises. These are:

1.Political issues, how will the EU as the ultimate arbiter frame the consolidated tapes?

2.Regulatory Framework, who will be the responsible oversight authority?

3.Licensing, how will the data be licensed for usage?

4.Potential Revenue Impacts, what will these be for the new operating entities, effects on data consumers and existing data sources?

There are in addition infrastructure and technical issues to be sorted out, however these will be a function of previous decisions.


The EU has an unique construct where the Executive is the technocratic initiator of legislation and regulation. It is a rules and standards based organisation which tends to err on the side of more and intrusive rules rather than less especially compared to other jurisdictions like the US.

MiFID2 is a good example of how the EU is likely to approach the practicalities of implementing Consolidated Tapes. While the US Consolidated Tape will be seen as a benchmark, its issues especially with regards to operation and fees means EU technocrats will seek to avoid a like for like equivalent except for the fact it is a consolidated tape.

Data sharing and distribution will be very important, the EU will demand infrastructure and technical competence resides within its borders. Equally it will have a preference for EU owned entities and avoid external parties if possible. This is protectionist, and likely to place artificial limitations especially for any OTC based consolidated tapes.

Activism from both industry groups, especially Germany’s BVI, and financial institutions will play a role in decision making as well.


A major consideration, the Consolidated Tapes are going to be high profile, therefore attracting interest in its involvement. ESMA is the most logical home for them to be regulated but expect interest from the ECB. ESMA as primary regulator will certainly insist that the Consolidated Tape operators are in close proximity, so the most likely locations for their presence will be in order 1. Paris, 2. Frankfurt 3. Brussels.

Oversight of the operation will be distinctly heavier than the US, and ESMA will seek to maximise its own autonomy from Brussels in terms of ability to change the rules and increase supervision over market data pricing.

The recent focus on market data costs, price discovery and overall transparency will be drivers in approach and policy towards the consolidated tape operators.

One important aspect is the regulators will insist on clear daylight between the operating entities and their parent companies to maintain independence integrity and avoid potential collusion


The US Consolidated Tape is complex with a wide range of fees, coming under the purview of the NYSE. The EU will insist on autonomy of the operator from any interested party, even if say an Exchange or venue, like Bloomberg, MarketAccess for the fixed income tape, is part of the management team. This impacts the licensing of the data products, as it will require independence from say an exchange’s market data team.

The EU is likely to place price caps and controls over fees, insist on vetoes over products and services offered and any fee increases. The operator will be prevented from limiting access to Consolidated Tapes, and a level playing field will be a component of the licence fees and structure


There will be revenue ramifications for the exchanges but at this stage it is hard to predict what they will be, however we can determine the four most likely areas to research.

1.Will the Consolidated Tape operators pay fees for the data from the exchanges and other data sources?

2.To what extent will the Consolidated Tape operators share revenues with data owners? (In this environment who manages the tapes becomes very important)

3.Will revenues be diverted from being paid direct to the exchanges to the Consolidated Tape operators? This is going to be highly dependent upon how the Consolidated Tapes are structured and what data is included within the Tapes. The US experience is likely to be instructive but not necessarily indicative

Fees charged for the Consolidated Tapes will feed back into the ability of exchanges to charge for their own products


Whenever regulators decide to act, particularly in financial markets ‘the law of unintended consequences’ comes into play. For completely electronic markets as operated by exchanges the move to offering a pan-European consolidated tape should not prove a great technical challenge. Off exchange trading could be more problematic, though the non-presence of US style dark pools makes the task easier.

On the other hand OTC markets which are more fragmented with far more venues, peer to peer trading, usually composed of significant non-electronic trading presents a broader range of hurdles. The number and representative nature of venues becomes far more important, as well as the timeliness of the reporting. A fully electronic market manages to report sequential trading, hybrid trading presents potential issues.

Finally, one last item to consider, how will FX rates be treated? Most participating markets will have the €uro as their currency, but others like Switzerland (if included), and Eastern European countries have their own. While it is relatively easy to provide real time updates in multiple currencies baselines need to be established.

How the Consolidated Tape frameworks are established will define their operations and ultimately success.

Keiren Harris

14 June 2023

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