The European Fund and Asset Management Association (Efama) has called on policymakers to support European Parliament proposals over the establishment of an equities/ETF consolidated tape.
Efama noted that market participants, including both European buy- and sell-sides, have maintained that a consolidated tape that only produces post-trade data – a measure being mooted by policymakers – will not meet with market demand required to make the tape commercially viable.
The asset manager trade body said a consolidated tape should include ETFs and equities on a single tape and deliver data in as close to real-time as technically possible, as well as provide both pre- and post-trade transparency. Further, it should be priced on a reasonable commercial basis and be consumed on a voluntary basis, and it should benefit from a robust governance framework.
It was claimed the lack of a consolidated tape could impact global investment flows into EU ETFs, which are popular in other jurisdictions such as Asia and Latin America for their withholding tax benefits.
Tanguy van de Werve, director general of Efama, said: “This would be a legislative setback that European capital markets can ill afford with competing markets globally offering better trading conditions, and demonstrating the growth to prove it.”
Susan Yavari, senior regulatory policy advisor – capital markets at Efama, said issuers of EU ETFs are unable to capitalise on this interest due to the lack of a real-time consolidated tape.
“A real-time equities/ETFs CT [consolidated tape] would put the EU on a par with the US for ease of data access. There is at stake around 10-20% of AUM in US ETFs that are held today by non-US clients. This represents around $1 trillion, a good portion of which could migrate to EU-listed products.”
Small and mid-cap stocks could also benefit from increased visibility and the ease of accessing complete liquidity and price data in a single place, the trade body noted.
Finally, a consolidated tape could help encourage greater retail investor participation in markets through the availability of real-time market data to provide best execution and ensure investor protection, the trade body said.
Efama noted that six more firms had come forward to support the European Parliament’s text supporting the inclusion of real-time, pre-trade data in the equity/ETFs consolidated tape. DJE Kapital, JP Morgan Asset Management, CaixaBank Asset Management, UBS Asset Management, Universal-Investment, and Vanguard join 18 other Efama members who have signed a letter endorsing the European Parliament’s proposals.
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