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Brussels is proposing to dump the companies running its live share trading database if they fail to meet revenue targets for two years, a move that has raised concerns among some industry participants about the effectiveness of the ambitious project.
The European Commission has suggested setting minimum turnover targets for the companies running a database of live stock information, known as a consolidated tape, according to documents seen by the Financial Times. If the data provider fails to meet the target for two years, officials could withdraw its tender, according to a proposal circulated in Brussels.
The plans form the basis for a meeting between officials and industry on Thursday that will try to hammer out the fine details for running the tapes. Brussels has pushed for the creation of the tapes, which would be similar to ones in the US, as a way to deepen and unify the EU’s fragmented financial markets. The EU wants to bundle together basic trading information, such as price and trade size, from Europe’s patchwork network of exchanges and alternative marketplaces.
Supporters say it will make European stock markets more transparent and attractive for international and retail investors. Rainer Riess, director-general of the Federation of European Securities Exchanges, which represents 35 trading venues, said potentially ejecting the data provider after two years “defeats a little bit the purpose of the tape”. “We want the tape in order to have a functional capital markets union . . . we can’t switch the provider every two years,” he added.
The proposal estimates that revenues would be generated by 10,500 fund managers paying for the additional information the tape offered. Pricing would be tiered, with the majority taking out the most basic subscription. The biggest groups are expected to take the most expensive option. “Revenue projections are highly dependent on user interest,” the paper said...
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