The EU's standardized data labeling system is gaining popularity
The European Union is moving closer to the launch of a Consolidated Tape for equities and exchange-traded products (ETPs), with EuroCTP emerging as the main contender for the role of Consolidated Tape Provider (CTP) in the region.
The Consolidated Tape, an electronic system that aggregates real-time data from securities exchanges and provides price and volume information to all market participants, has been in the works since the proposal was first made in 2010 as part of the discussions on the directive and regulation on markets in financial instruments (MiFID/MiFIR).
EuroCTP, a service provider with shareholders including Deutsche Börse, Euronext, and 12 other trading platforms, submitted its application before the deadline and has a consortium of 14 exchanges backing it. Other initial contenders such as Big xyt withdrew due to financial reasons, and ventures like SimpliCT by Aquis Exchange and Cboe Europe exited earlier, leaving EuroCTP unopposed.
The European Securities and Markets Authority (ESMA) is overseeing the process and will evaluate the submitted proposal(s) and select the operator. EuroCTP claims its proposal addresses broad use cases exceeding minimum requirements. However, there is some criticism in the industry regarding this "one-horse" race, with concerns that EuroCTP's model, controlled by incumbent exchanges, may have conflicts of interest and structural flaws limiting the tape's attractiveness.
For bonds, a separate tender has already been awarded to Ediphy (fairCT), but this is distinct from the equities and ETP tape. The ESMA is also tasked with selecting an operator for derivatives and making all necessary preparations for the launch of the Consolidated Tape.
The introduction of the Consolidated Tape is part of the Capital Markets Union in the European Union and aims to provide a uniform, up-to-date overview of the market for all participants. The central debate leading up to the introduction of the Consolidated Tape is the referral times, or how quickly transactions need to be reported. The ESMA and FCA categories will differ, posing a challenge for European trading departments in reporting.
Both the EU and UK are expected to launch their bond data tapes in the first half of 2026. The US has had a functioning Equity Consolidated Tape since 1976, and broker-dealers have been required to report transactions through the Trade Reporting and Compliance Engine (TRACE) since 2002.
As the evaluation process continues, the future of the Consolidated Tape for equities and ETPs in the European Union remains uncertain. However, with EuroCTP as the sole remaining bidder, the path towards a more transparent and efficient market is becoming clearer.
[1] https://www.esma.europa.eu/press-news/esma-news/esma-announces-next-steps-eu-consolidated-tape-project [2] https://www.financialnews.co.uk/news/markets/euroctp-emerges-as-sole-remaining-bidder-for-eu-consolidated-tape-project-5634431 [3] https://www.esma.europa.eu/press-news/esma-news/esma-awards-contract-operator-consolidated-tape-bonds-ediphy-fairct-initiative [4] https://www.investopedia.com/terms/c/consolidatedtape.asp [5] https://www.investopedia.com/terms/t/trade-reporting-and-compliance-engine.asp
The combination of the industry and business sectors is watching the progress of the single bidder EuroCTP in the evaluation process for the Consolidated Tape Provider role, with finance and investment firms expressing concerns about potential conflicts of interest and structural flaws in the tape's attractiveness.
Despite the uncertainty surrounding the evaluation, the consolidated tape initiative is part of the larger Capital Markets Union in the European Union, aiming to enhance transparency and efficiency in the equities and exchange-traded products market.
