In 2023, regulators intervened to improve post-trade information with MiFID II. Their aims were to:
- Improve the quality and consistency of raw data. This was to be achieved through more standardized trade reports, and OTC trade reporting through an APA (Approved Publication Arrangement).
- Reduce the cost of post-trade data for investors, including the unbundling of pre- and post-trade data, and the introduction of a European Consolidated Tape.
To help achieve these objectives, new APA and CTP (consolidated tape provider) entities were introduced. ESMA also promised to develop common formats, data standards, and technical arrangements, to streamline post-trade data consolidation.
What does the consolidated tape requirement mean for the markets?
MiFID II called for consolidated post-trade data to be available for all EU instruments (including those traded off exchange). Rather than participants having to consolidate this data from numerous sources themselves, data would be available as a single consolidated tape. To achieve the goal of a single consolidated tape, markets and regulators need to agree on a standard format for trade data across all EU venues.
Current regulatory developments – improving standardization and transparency.
Improving transparency is again a key goal for the upcoming round of rules adjustments, aka the MiFID II Review, including further efforts to establish a consolidated tape. Better data quality is a prerequisite for any tape and represents one of the main challenges and costs of implementation. More standardization of data across trading venues is also required. However, a common standard has already been developed, one which many trading venues already adhere to. This is the industry-led Market Model Typology initiative (MMT).
