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Risk Management: In the Eye of the Storm

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Europe's Challenge

December 15, 2010
By Chris Kentouris

However, as Grob notes without an agreed syntax for describing trade types and a universal mechanism to avoid double counting, the net result will be more rather than less confusion once again. And still to be determined is how CESR defines “reasonable costs” and low latency for the ECT.

In the U.S., the Securities and Exchange Commission mandates that brokers subscribe to data from all markets to meet best execution requirements. As a result, the cost of the consolidated tape is controlled by the SEC to ensure it is available at reasonable cost.

Naturally, commercial vendors are eager to maintain their own turf. Thomson Reuters, for one, insists there should be multiple operators of a consolidated tape rather than a single one. “There could be competition on price and the mechanisms for delivering the data,” says Andrew Allwright, business manager for MIFID solutions at Thomson Reuters. “A single mandated provider would inhibit innovation and promote higher costs.”

Allwright says that a new service offered by Thomson Reuters next year will complement its existing post-trade consolidated tape on a 15 minute delayed basis for 1,800 European stocks. The new product which anticipates the adoption of CESR’s trading flags, will offer real-time post-trade data on 6,436 stocks recognized by CESR as “trades admitted for trading on European Union regulated markets”

Still Allwright anticipates that firms wanting to use consolidated data to prove they have met MIFID’s best execution requirements will use Thomson Reuters’ 15-minute delayed data. NYSE Technologies says that its post-trade data will also be available in real-time and 15-minute delayed formats.

“A [delayed] Tape of Record is a very simple and practical application of the newly-defined standards that address transparency issues in a manner very similar to what investors already know today as time and sales,” says Mark Schaedel, global head of data products for NYSE Technologies. ”While there is no single source for time and sales data today it informs investors with a consistent view of the markets.”


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