Plans for a new financial trade data service in the EU raise fears of a monopoly

This article was originally published in English

The European Union (EU) plans to impose a New business data service in financial markets, promising transparency and investment, but others fear it will only create a new monopoly.

He European Securities and Markets Authority (ESMA) closed a consultation on August 28 on services that could be on the market in 2026, but some fear the move will give exchanges a greater chance of an even more centralized power.

The EU has long hoped to develop its nascent capital markets, and is confident that a series of new, established layers will help unify a fragmented ecosystem.

The publication of data on the price and volume of securities transactions – an electronic version of the stock tickers seen in old movies – could bring transparency, competition and modernity to surprisingly old-fashioned markets, according to its defenders.

“There can be no real single market without a more integrated vision of trading in the EU,” says the European Commission in a 2020 action plan for capital markets.

The Commission considers that allowing participants in financial markets to compare a stock or a bond Traded in Paris, Frankfurt or one of the bloc’s 300 regulated trading venues, it would attract much-needed capital.

It would also keep pace with its rivals: The US has a consolidated tape for half a century, and the United Kingdom will introduce it shortly.

EU laws from 2014 contained provisions for the service, but “nobody asked for it,” Eglantine Desautel told Euronews, citing difficulties in gathering and paying for data from across the EU ecosystem.

Now, thanks to a legal update that came into force in March, the idea could be financially viable, believes Desautel, whose company, EuroCTP, will submit a bid to manage the capital belt“We are passionate about doing this, and designing a product that meets the needs of customers,” Desautel told Euronews.

“The European market is quite difficult to master… there are many execution venues,” said Desautel, stating that the lack of a global vision of the market “does not make it very easy for investors to enter Europe.”

It is not the panacea

Other financiers share her positive opinion. “The consolidation of procedures is not the panacea” to prevent European savings from leaving for the US “but it certainly helps,” Susan Yavari, deputy director of capital markets and digital at Euronews, told Euronews. European Association of Investment Funds and Asset Management.

Brokers can only recommend what they know, meaning your pension portfolio could be missing out, Yavari said. “We know of cases where brokers have chosen not to buy or have stopped buying Italian or Spanish data, as well as coverage of those securities,” he explained.

But he is also concerned that The new service leaves the competition out of the gamegiving more power to the already powerful trading centers.

Participants in financial markets have long complained about the fees charged Stock exchanges charge for access to dataan argument regulators have occasionally weighed in on, but the situation could get even worse if asset managers are forced to use the new layering service, Yavari said.

“As for monopoly, I think that They must comply with very strict governance rules, including conflict of interest.“he said. He is also concerned that ESMA’s supposedly competitive tender is nothing more than a smokescreen.

“There is no one else competing” for the equity service apart from EuroCTP, he added. “Even from the tender process, risks are being created.” Yavari wants EuroCTP to have a board of directors that gives voting rights to potential users of the tape, instead of its current, purely advisory structure.

Aside from the issue

For some, injecting competition is not the point; the idea is to have a single service with a consolidated vision. However, Desautel insists that its project is open and is not subject to market agents.

Although it was created in 2023 by a consortium of 15 European exchanges, EuroCTP “operates completely independently” of its shareholders, does not use their platforms or infrastructure, and shares ideas with other parts of the financial ecosystem, it says.

“It could be part of the model to be open to other parties,” he said. “It doesn’t have to be just the exchanges.” In a statement in May, ESMA said its rules “will contribute to increasing market transparency and removing obstacles” to a consolidated tape in the EU.

Contacted by Euronews, a spokesman for the regulator said it was assessing the responses received but declined to comment further.

Bonds

The equity service is just one of many new layers planned by ESMA. For other securities, such as bonds, The film could prove transformativeas told to ‘Euronews’.

“We think it will ultimately drive a more electronic marketplace,” said Chris Murphy, chief executive of Ediphy, which could bid for the bond tape when bidding opens early next year.

Far from the popular image of high-tech finance, “The bond market is the last bastion of the telephone and people chatting to each other,” he said. “It’s far from fully automated… it’s crazy.”

Bond servicing may be less politically fraught than for equities, but ESMA’s decisions could still prove decisive, Murphy said. “We haven’t seen the final rules,” he told Euronews. “We don’t know if it will be commercially viable for someone to bid”.

Disputes over how to design financial market infrastructures are not new, nor are they unique to Europe. A few years ago, the Securities and Exchange Commission unsuccessfully tried to force changes in the governance of the US Consolidated Securities Association, which Yavari says is also dominated by the major exchanges.

But, he adds, the stakes may be higher for Europe, whose reputation for attracting capital is much weaker. “All investors want to be there.” [en EE.UU.]”says Yavari. “We have to make it as easy as possible for them”.