The WFE welcomes the opportunity to comment further on the framework for a UK equity consolidated tape (CT).
The WFE supports the creation of a consolidated tape that stimulates capital market engagement, improves informed trading, enhances price formation, supports risk management, ensures best execution practices and adequately compensates data creators. However, we believe that the current proposal falls short in this regard.
In particular, we would highlight that:
- Exchanges create data as a join-product alongside trade execution. Rather than calling them “data contributors” the FCA should recognise exchanges as “data creators.” Once we recognise exchanges properly as data manufacturers, we can have a more honest conversation about how the consolidated tape impacts them and ensure that they are fairly credited for the vital role they play in the market ecosystem.
- The success of the CTP should be linked to real improvements in capital markets. These should include: stimulating capital market engagement, improving informed trading, enhancing price formation, supporting risk management, and ensuring best execution practices. The FCA’s current goals are instead rather circular.
- Exchanges ought to be fairly compensated for their role in manufacturing and providing data. Instead of rewarding exchanges for their transparent price formation, the transparency they provide to the markets increasing trust and reducing risks, the FCA is catering to the private interests of investment banks and asset managers to the detriment of exchanges and the wider market.
We are concerned that the current proposals may inadvertently weaken price formation, distort competition, and harm the broader UK capital markets ecosystem. In particular, the UK listings environment and the undertaking of new IPOs.