18 April 2023

FT's Asgari: EU faces last-ditch challenge from exchanges over trading reforms

European reforms to make the region’s markets more competitive with the US face a last-ditch opposition from stock exchanges reluctant to hand over their data to a planned real-time database of share trading information.

European Union officials on Tuesday will begin negotiations to lay out the framework for live records of stock and bond trading information, a move that supporters say would vastly improve transparency and entice big foreign investors to trade in European stock markets. The European Commission, the EU’s executive arm, hopes the measures will help unify its fragmented market and make it more comparable to the US, whose stock markets are more dynamic and twice as valuable. European markets also have suffered a dearth of listings, with the value of money raised dropping to its lowest point in a decade last year, according to Dealogic data.

Turnover in equities, an indicator of market liquidity, rose 40 per cent in the six years to 2022 in the US but remained flat over the same period in Europe, according to data compiled by AFME, a banking lobby group. But the EU’s plan to create a single database of live stock prices faces a final lobbying pushback from Europe’s stock exchanges, which argue handing over data deprives them of much-needed revenues and threatens the viability of some of the region’s smaller bourses. “It may mean in smaller countries they would not have a listing venue anymore,” said Rainer Riess, director-general of the Federation of European Securities Exchanges, which represents 35 venues across the region.

The European Commission sees a so-called consolidated tape as a way to overcome the hurdle of fragmented European markets. Trading is scattered between national exchanges, alternative trading venues and private marketplaces. Such tapes have been a feature of US markets for decades. ...

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