Audiences met the suggestion that EU and UK regulators should align their CTP selection processes with applause at the FIX EMEA conference in London.
However, regulators on the panel were less enthusiastic about the prospect. “It would be great to have a dual product, with economy of scale and user ease benefits,” the head of markets at one regulator agreed. “But as much as we would like them to align, policy-wise they both need to work.”
Following up on the panel, ESMA told Global Trading: “Since the withdrawal of the UK from the EU, running a joint selection process for CTPs is all but impossible.”
Jamie Whitehorn, head of trading venues at the FCA, agreed that discussions on how the tapes can work together will be helpful – but added that these will not be able to take place until providers have been chosen by both jurisdictions.
“These processes have to be independent and fair,” he noted.
From the other side of the channel, Carsten Ostermann, head of the markets and digital innovation department at ESMA, confirmed: “Due to the strict rules that we have to adhere
to I cannot call the FCA to check whether they are going to choose the same provider.”
He added that the slight delay between the EU and UK tape selections would also pose a problem in a shared approach.
ESMA confirmed to Global Trading: “[We] maintain a regular dialogue with the FCA on topics of mutual interests, and we indeed have been sharing learnings on market transparency in general, and on the consolidated tapes in particular. It however remains difficult to explore deeper collaboration avenues given the institutional set-up at this stage.”
From a provider perspective, Eglantine Desautel, CEO of EuroCTP, told Global Trading: “Parallel CT discussions may lead to divergences between EU and UK regimes. At this stage, any provider seeking to deliver a tape in both jurisdictions would need to develop two distinct offerings.”
“The FCA will determine the best approach and guidelines for the UK. EuroCTP is focused on providing a robust and compliant real-time consolidated tape for shares and ETFs in Europe. If EuroCTP is selected, and if there is an opportunity to collaborate and closer regulatory alignment, our team will be ready to provide expertise and work with the future UK equities tape to facilitate users’ lives.”
Later in the conference, a regulatory executive at a prominent market maker commented on the wider benefits a strong CT would bring to Europe: “The consolidated tape is about how we market ourselves and start to look at ourselves as a region to bring more growth in the market.
“If our decision makers, and there is a real political will for this, decide to create the perfect framework for innovation, for people to take up business, then there will be more IPOs, people will be excited about going to the exchange, raising money, hiring people and so on. I think this dynamic has started and it’s going to keep on growing.”
The CTP selection process for bonds is currently underway in both the EU and UK, with go-live expectations set for 2026. The FCA is now engaging with the market on potential designs for the equity tape, with a consultation paper set for publication later in the year. The selection tape for the European equities CT will begin in June this year.
There is still uncertainty around the details of the tapes in both jurisdictions. CTP bidders have access to ESMA’s initial guidance, but legal measures have not yet been adopted.
While the European Commission would not be quoted on the issue, a source familiar with its thinking advised: “Stakeholders should be working with the drafts as they come out. There is no legal certainty, but it’s a good basis to start from. Otherwise, there will be no tape.”
Preparing the equity tape will be “one hell of a task”, they added, drawing particular attention to pre-trade transparency requirements.
The new transparency regime is scheduled to be adopted in May or June 2025, before heading to the EU Parliament and Member States for consultation – a three month process. “[The EC is] looking to align the application dates for all the Level 2 measures so there is a single starting point,” the source said. “That will be early next year, we think. If all goes well, legal certainty should be released in September or October.”
“There will be time, although not a lot of time, for the industry to adjust to the new regime before the first tape goes live, which the EC expects to be in March or April.
