FCA targets equity market transparency with new reform package
The Financial Conduct Authority (FCA) has unveiled a package of reforms aimed at improving transparency in UK equity markets, including plans to introduce an equity consolidated tape within the next 18 months.
The regulator has launched two consultations setting out the framework for the tape and proposed changes to equity market structure.
It has also introduced a market activity reporter for shares, giving investors a daily snapshot of trading activity while the consolidated tape is developed.
A consolidated tape brings together pre- and post-trade data from trading venues into a single feed, giving market participants a clearer view of trading activity and market liquidity.
The FCA said competition and innovation had strengthened UK equity markets but had also increased fragmentation, making market-wide data more difficult and costly to access.
It believes the consolidated tape will improve transparency and help investors build a more complete picture of market activity.
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The consultation also seeks views on how the regulator should monitor market quality and whether additional intervention may be needed as market structure evolves.
FCA executive director of markets Simon Walls said the reforms would simplify access to market-wide information.
“A consolidated tape will make it simpler and easier for investors to see the whole market picture. Today’s package settles the big design questions and sets the path to deliver the tape within the next 18 months.”
The reforms build on the launch of the UK bond consolidated tape in June, which has attracted more than 1.6 million licence subscriptions.
Industry bodies welcomed the proposals.
Investment Association head of capital markets Hugo Gordon said completing the design of the equity consolidated tape would improve access to market-wide data and support more transparent and efficient UK capital markets.
UK Finance managing director for markets, David Raw, said including both pre- and post-trade data would strengthen transparency, improve price formation and support greater investment in UK markets.
The FCA is consulting on the proposals until 16 October before beginning the procurement process for an equity consolidated tape provider.
