EU lawmaker proposes market data waiver for smaller bourses

LONDON: Smaller stock exchanges in the European Union should be exempt from having to supply market prices to a real-time record of transactions for investors, a senior EU lawmaker has proposed.

An EU draft law is mandating “consolidated tapes” to mesh stock, bond and derivatives markets spread across 27 countries by forcing platforms to supply prices as close to real time as possible to investors.

The aim is to enable investors to find the best deals. Exchanges want a 15-minute delay before the mandatory handing over of their data. Banks and investment funds say a tape will be of no use if not in real time.

The plans pit exchanges like Deutsche Boerse and Euronext, keen to keep control over data, against asset managers and banks who say that data on share trades is too expensive – a complaint rejected by exchanges.

The European Parliament and EU states will have the final say on the proposed legislation.

Danuta Huebner is leading negotiations on parliament’s side and will propose exempting platforms which represent less than 1% of total EU daily trading from supplying prices to the tape, an excerpt from her upcoming report, leaked to the press, said.

Platforms which “do not contribute significantly to the fragmentation of EU markets” would also be exempt, but bourses that do not make use of an exemption should get a higher share of the tape’s revenues.

Smaller bourses, such as in eastern Europe, would benefit if the amendment is backed by parliament and EU states.

In a move banks will welcome, Huebner, who had no immediate comment, backed the draft law’s provision for a tape giving real-time prices.

It was also “essential” that the share tape contains “pre-trade” information, the excerpt says, a step industry bodies like the Association for Financial Markets in Europe have called for. The draft law only refers to “post-trade” prices or completed transactions.

FESE, which represents exchanges in Europe, said the proposals would further concentrate share trading among large, non-EU investment banks.

“We will continue to advocate for a package of market structure measures… but not one that publishes pre-trade data, creating an illusory view of the market,” FESE said.

The efficient functioning of Europe’s markets is now even more critical to fund the economy given the financial impact of war in Ukraine, said AFME CEO Adam Farkas.