Chris Murphy, CEO and co-founder of Ediphy, says his fintech business will seek to provide a consolidated tape for European bond markets, using a low-cost utility model in collaboration with major industry players.
Murphy, formerly the global head of fixed income sales & trading at UBS, is calling on companies of any scale to support the project’s development and secure the goal of democratised access to an important aggregated data source. The Dutch Authority for the Financial Markets (AFM) is actively supporting these types of initiatives on a non-exclusive basis and will become an observer participant.
“The advantages of a consolidated tape for European bond markets have been recognised for many years and the concept of a Consolidated Tape Provider (CTP) was encoded in the MiFID II Directive back in 2014, yet one is still to emerge,” Murphy said. “We believe the transparency a post-trade tape brings will improve the depth of liquidity, strengthen price formation, enhance best execution and increase the attractiveness of European capital markets for issuers and investors.”
Ediphy is pursuing an industry utility model for its proposed consolidated tape solution. As an analytics company, it says it has no commercial objective to develop a CTP as a profit centre. Further, it has no ambition to create another data monopoly and believes the right solution for the market is one that democratises the data and makes markets fairer.
“Having developed the underlying technology and already created an advanced prototype, I’m delighted that Ediphy Analytics is in a unique position to launch this initiative,” says Murphy. “Now we invite companies to act as early adopters to support us in finalising a solution that will benefit all market participants. Participants will gain early access to each prototype iteration as additional sources get consolidated and, by their feedback, will be able to shape the final version.”
While recommending the creation of a Consolidated Tape Provider, MiFID II legislators left its development to the market.
“We’re seeking to develop a utility that can run on a cost-recovery basis to deliver the solution at the lowest cost for the entire industry. Regulatory engagement will ensure that we resolve outstanding issues related to data access and data quality and we invite other European National Competent Authorities and regulatory bodies to join as observer participants,” Murphy explains. “With the European Commission recently announcing their focus on a tape for bonds we believe the timing is right to embark on this important initiative.”
Liz Callaghan, a director for secondary markets at the International Capital Markets Association (ICMA), says, “ICMA has been at the heart of the dialogue to establish the operating model for an EU bond CT. We welcome all industry CTP efforts and applaud Ediphy’s pioneer announcement of their CTP prototype, with regulatory support, and look forward to finding out more about Ediphy’s initiative.”
“Improving market transparency by increasing the availability of transaction data enhances the market standard and is key if we want to reshape the manner in which we assess and access liquidity,” said Eric Heleine, head of trading at Groupama Asset Management. “The consolidated tape is the cornerstone to leverage the digitalisation of the fixed-income market structure. The challenge for the regulator is to create something business oriented with smart data made easy to consume by all market operators. As an asset manager, we will support all utility-based initiatives created to help feed this post trade data into our execution processes.”
“The role of data in fixed-income markets is getting critical to find the right bond, at the right price and the right source of liquidity,” said Stephane Malrait, head of market structure and innovation, financial markets at ING. “Creating a strong industry-led CTP will help all market participants in terms of increased data quality and data transparency for liquid instruments. It’s a great idea to start the process to define the technology and user requirements before regulatory changes, with a public & private collaboration effort to help industry adoption and the success of such a large effort. The trading and liquidity workflows in fixed income are quite complex and it is important to bring the experts together to work on the biggest change in the EU fixed-income market for years to come.”
Joeri Wouters, senior fixed income dealer with KBC Asset Management added, “Any efforts whereby the public and private sector come together with the aim of democratisation of market data should be welcomed. The proposed solution should tackle the current problems surrounding the distribution of post-trade data and benefit the quality and accessibility for all market participants alike.”
The prototype consolidated tape will be built in parallel to any revision to the current framework being carried out by the European Commission under the MiFID Refit review. Ediphy reports that a fully viable CTP solution will be ready upon completion of the Refit process.
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