An eu-backed report has called for a new self-regulatory body to track equities trades and impose fines on exchanges and brokers that provide poor data, in an effort to bolster the regions capital markets in the wake of the uks departure from the bloc.
A so-called consolidated tape, bundling together data from europes patchwork of more than 30 exchanges and trading venues, has long been a goal of brussels.
But the new report, by uk consultancy market structure partners, suggests for the first time that enhancing this with the power to levy fines would take the eu closer to the us model for regulating market data.
Being able to enforce the standards, not just technical but operational, and rules is critical if europe wants to succeed in building deeper capital markets, said the consultancys chief executive niki beattie, who wrote the report.
The study comes as brussels explores ways to make its capital markets more competitive in the wake of brexit. last month policymakers called for the creation of a tape, saying a true single market cannot exist without a more integrated view of eu trading.
Giving that body the extra authority to punish transgressors would create something similar to finra, an us regulatory agency run by the industry but with the power to mandate comprehensive trade reporting.
The in-depth survey, published on wednesday after a delay earlier this year, was conducted on behalf of the european commission to analyse the cost to build and maintain a consolidated tape. the body would collect information on flows, transaction sizes and prices from the regions fragmented market.
The report rejected the notion, supported by some politicians, that market participants could agree to establish such a database themselves. without a central body to enforce standards and clamp down on data providers commercially exploiting their market position, trying to consolidate data is a waste of time, it said.
Many fund managers have complained that the 2018 mifid ii rules failed to improve market transparency, as intended. transactions remain 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.
Fund managers say that makes the data too disjointed and expensive to help them measure trading costs and performance. the region's bourses, meanwhile, have resisted the introduction of a consolidated record for europe, demanding a stronger case for its use and adequate compensation for their data.
The study laid out 14 cases of how the tape could be used, not only for investors to find the best price for buying and selling shares but also for pricing new debt and equity issues, risk management, settlement, surveillance and analysis of trading performance. the system would cost 11m to build, msp said.
Under its plan, all data providers would be mandated to participate as members while start-up and annual running costs of 6m-7m could be levied in part through annual membership fees for suppliers of data. it would cost an average of 16,000 per entity per year, the report said.
Politicians have in the past called for the financial markets industry to build a data repository itself, rather than having one imposed on it. but competing commercial interests, as well as slow and patchy data feeds, have killed off many previous initiatives.