According to a draft of the Commission, stock exchanges in the EU should in future provide data on trading transactions for a Europe-wide comparison register. Such a system called “Consolidated Tape” should, among other things, enable investors to identify the most favorable deals for them and generally lead to more transparency in stock market trading, according to a draft paper that the Reuters news agency saw on Thursday. Europe-wide trade data are to be recorded on this system. The proposal is part of a reform package expected next week by the EU Commission, with which the capital markets in the EU should be strengthened after Brexit.
Banks, asset managers and other investors have not yet had any clear comparisons when one and the same security is traded on the most varied of trading venues in the community of countries. According to the document, stock exchanges should be obliged to contribute to an EU-wide register for stocks and bonds in return for appropriate remuneration. All sources of market data would have to make standardized core data available for collection points, it said in the document. Exchanges would be guaranteed a minimum income for the provision of price data.
The topic also plays an important role in the discussion about controversial remuneration systems at online brokers - the so-called "Payment for Order Flow" (PFOF).
In this practice, customer orders are placed at certain trading venues, and the brokers receive remuneration for this.
One of the criticisms of the PFOF model is that the orders may go to where the brokers are guaranteed the highest payments and not to where the best rates are available for customers.
The creation of a “consolidated tape” would possibly lead to more transparency and comparability.