Britain to set up real-time bond and stock trading record

Britain’s financial watchdog proposed a real-time record of stock and bond prices on Wednesday to help investors spot the best deals and improve the capital markets’ attraction.

It is the latest in a welter of reforms, many contained in a new law approved last week, to bolster the City of London as a global financial centre, particularly after being largely cut off from the European Union due to Brexit.

The Financial Conduct Authority (FCA) said it was proposing to create a ‘consolidated’ tape, which combines trading data from the London Stock Exchange and other platforms, to increase transparency, access to trading, and cut trading costs.

The FCA aims to have the regulatory framework in place by 2024 and would run a competitive tender for a bonds market tape first, followed by stocks.

“By building a more complete picture of the market, a CT will reinforce the UK’s position as a leading centre for the listing and trading of bonds,” the FCA said in a statement.

Banking body UK Finance said a tape would increase investor confidence and hoped an equities tape would follow a bond tape quickly, backed by mandatory contributions from all trading platforms.

Later this year, the watchdog will consult on further reforms to the transparency of bond and derivatives markets to aid delivery of trading data alongside a tape.

Wall Street has long had tapes for stock and bond markets, and the EU has just finalised a deal on updating its securities trading rules that includes introducing tapes for stocks and bonds despite heavy pushback from exchanges in Europe.

The FCA said in March it found that competition in financial market data is not working as well as it should and that it could change the rules, findings that would “inform the design” of a tape.

Markets industry body AFME said that even an appropriately constructed tape would not fully address the currently “unacceptably high cost of market data”.

“We trust that the FCA’s extensive work on wholesale data will help address anomalies in this area, which are detrimental to financial markets and their users,” AFME CEO Adam Farkas said.

There is also new guidance that will come into force in October to clarify where the regulatory “perimeter” lies, meaning when authorisation is needed for an activity, the FCA said.