Bond Consolidated Tapes for Europe and UK - Cost vs Speed vs Quality

Tim Whipman attended the Bond Pricing Forum in London yesterday where he spoke on a panel discussing the new Consolidated Tapes for bonds in the EU and UK.

With the EU looking to select the Consolidated Tape Provider in December and the UK making its choice in January it is unsurprising that this turned into such an interesting panel. Three of the four potential bidders (including TransFICC) were on the panel and the other was in the audience.

There was agreement that there is buy-in for the CTPs from most market participants and that TRACE in the US is recognised as being one of the drivers of market growth over the last 20 years. Greater transparency and a level playing field in terms of information should provide valuable insights to investors, liquidity providers and issuers. However, even when the new CTPs are launched there will be no obligation for firms to buy these services - which is one of the reasons that the regulators have placed so much emphasis on the services being reasonably priced.

Both ESMA and the FCA require a low cost, high quality service which can be implemented quickly, connecting to up to 100 APAs, and distributing data to its users. The panel discussed if a CTP would have to compromise between Cost vs Quality vs Speed. In general it was thought that speed would be compromised.

At TransFICC we have a slightly different view -

- Cost = we will use key components from existing technology (hosting, connectivity, security and resilience) for post-trade data, which supports the delivery of a low-cost tape in terms of initial build and ongoing running costs.

- Quality = we already provide API normalisation and integration as part of our core service and this experience is critical for any prospective CTP. Our existing services are recognised as being market-leading in terms of quality, and they are in production with some of the biggest Fixed Income dealers globally.

- Speed = using elements of existing technology allows us to deliver a timely solution. In addition we believe that CTP technology should not be limited to supporting only 15 min delayed data, rather be able to support real time publication of trades (and potentially price streaming/pre market data in the future). We believe there are significant use cases that would benefit.

TransFICC has been running a CTP pilot for nearly two years and during that time clients have tested it for performance, resilience, and ease of integration. The buy-side, sell-side, market data firms and venues have successfully tested data contribution and data output, the results of which have given us significant insight into how to develop and support a CTP.

After many years of discussion about a CTP for the EU and UK, bidding will begin this quarter with the final decision expected in December and January......watch this space.