Ediphy Analytics alleges that the Financial Conduct Authority has breached its own rules in selecting Etrading Software as the UK bond consolidated tape provider.
“The FCA is in danger of walking the City into its own Horizon PPE Medro procurement disaster. The bond tape should be a market infrastructure, not a liability. The FCA built a process that would have breached its own rules if it had been run by anyone else in the market,” a source familiar with the case told The DESK.
Ediphy’s central legal complaint against the FCA is that the auction process, run by third party DotEcon, was flawed and did not register its acceptance of the 0.68 weighted average price cap (WAPC) in round 54.
The company accepted the 0.68 WAPC bid at 14:00:37, but there is no record in the DotEcon log that this bid was confirmed. Three bidders made it to the auction process but aside from Etrading Software, no other parties were recorded as bidding in this round.
In all other rounds, the system noted when the ‘Accept WAPC’ button was checked, and then when this was confirmed. According to its cited conversations with the FCA, Ediphy did not confirm whether it received the confirmation screen for the round, but stated in its court filing that if a technical fault occurred it should have been able to submit a bid through other routes. The company attempted to do this after round 54, emailing DotEcon, “We have lost faith in the software. We remain in the auction. We will use the system in future iterations but we will confirm our bid status using the message system and email as a backup.”
Ediphy also alleges that the FCA has not kept sufficient records, being unable to provide documentary proof of the WebBidder logs.
Beyond this, Ediphy alleges that the FCA failed to manage a perceived conflict of interest in the case of Stéphane Malrait, whose appointment as a non-executive director of the FCA’s board was announced in April, effective October 2025. He was Independent Chair of the Consolidated Tape Industry Stakeholder Group at Etrading Software from January to 15 September 2025.
A source familiar with the case told The DESK, “There is an individual’s appointment to the FCA when he had been openly working for the firm benefiting from this contract. How does that work with the regulator’s own guidance around avoiding the perception of conflict?”
The FCA agreed that it identified this perceived conflict of interest when hiring Malrait, but that it saw no need for mitigations to be made.
Ediphy’s court documents allege a further slew of failures by the regulator, beginning early on in the procurement process. In June, Ediphy alleges, the FCA disclosed identified copies of bidder’s clarification questions with internal team comments attached. This is one of a number of complaints by Ediphy which, although not being claimed against, paint a damning picture of the regulator’s practices.
A source familiar with the case noted, “This case isn’t about any one firm losing a contract. The problem appears to be a conflicted process design that guaranteed an unsustainable bid. The industry told the FCA this was going to happen. This is how market utilities fail.
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What’s the WAPC? The FCA outlined six types of licences to be made available for both real-time stream and historical data access. An individual licence is for the internal use of retail or private investors. Five enterprise licences are available, for institutions with revenues of <£10 million, <£50 million, <£250 million, <£1 billion and >£1 billion. The price of each licence was multiplied by a specific weighting. The sum of these results made up the WAPC. Weightings for the first year skewed heavily towards individual users (47.6%), while prices for the largest enterprises only contributed to 0.00952% of the WAP. As these weightings are based on imagined demand, the FCA will adjust the formula in the second year of the tape, with 60% of the initial weights combined with 40% of the weights seen in year one. This formula would be repeated annually for the five-year term. |
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