Brussels rejects call for stock exchanges to be 15 minutes late in registering transactions
Brussels has rejected a proposal by European stock exchanges to install a 15-minute deadline for a record stock and debt trading, stressing that it wants to see a near real-time system to attract more investors from retail capital markets.
European Commission officials said on Thursday that a “consolidated band” – a live database of basic business information – should help investors find the most competitive prices for their transactions, while providing them with a protection.
The strong rejection comes as pressure groups present their final arguments to policymakers ahead of the publication of planned reforms to European capital markets by the end of the year. Europe wants to relaunch the creation of a central database as part of a series of measures aimed at making its own markets more attractive to international investors.
Policymakers have long seen similar bands for stocks and bonds in the United States as a model for boosting liquidity. A previous attempt to start one, through the 2014 Mifid II Market Rules, failed because the rules did not make it commercially viable for private companies. The European Commission hopes to have a beta version ready by 2023.
But two senior politicians publicly rejected a proposal earlier in the week from management consulting firm Oliver Wyman and mandated for Fese, the stock market lobby group, which said investors were better served by a 15-minute delay. to exchange information about stocks and associated exchange-traded funds.
John Berrigan, the Commission’s top financial services official, said a delay would not at all help investors find the most liquid places in the market to trade “at all”.
“We are talking about nanosecond bands here, we are talking about a tape that delivers in seconds but not in minutes,” he said at a virtual event hosted by Fese.
He acknowledged that Britain’s departure from the EU influenced the Commission’s thinking on its policies. The UK has launched a review of its own post-Brexit capital markets and has proposed some changes to its rules, including creating its own consolidated band and allowing more transactions outside of the UK. scholarships.
“Brexit has had major implications for the remaining Capital Markets Union 27 capital markets. We are lagging behind competing markets in terms of development, there is no doubt,” Berrigan said. “The UK is going to be a very close and very important competitive market and we have to keep an eye on what they are doing. What we do at the Commission is set up frameworks and let the markets develop as they wish.
Tilman Lueder, head of the Commission’s securities markets unit, said the tape was not intended for high-frequency traders “but for everyone to see, as quickly as possible”.
The Oliver Wyman report did not address issues such as access to real-time trade data, he added. “Our conclusion is that based on current licensing practices, it will be impossible to build a consolidated band.”
Berrigan said the Commission’s proposals on reforming its capital markets are expected to arrive in late November.