FIX Protocol Ltd., the London-based organization that owns the global messaging format for financial trading, published a set of European guidelines on how trade reports and market data should be consolidated to improve price transparency for equities.
The standards will call for each trade on each platform to have a unique identifier and increase consistency in reporting, FIX said in an emailed statement. One of its proposals is to identify a security by its unique International Securities Identification Number, or ISIN, and its currency. FIX also stipulated a similar standard for indicating the trading venue.
Alternative trading systems such as Bats Chi-X Europe, which accounts for more than 25 percent of pan-European stock trading, came into being after new rules in 2007 opened the door to competition with traditional exchanges. The new entrants grabbed market share, driving down trading and clearing fees, and brought improved trading technology.
Even as these new venues took market share from exchanges, fees for market data haven’t fallen. Also, incumbent exchanges continue to provide the reference price for stocks listed on their markets. This has fueled calls for a so-called consolidated tape that takes into account market data from all the trading systems to provide the price for a given stock.
Developing a consolidated tape is part of an overhaul of European trading regulations adopted in 2007 to spur competition between venues, the Markets in Financial Instruments Directive, or Mifid. Regulators are seeking to create a data feed that shows the price and volume of individual stock trades and where among dozens of venues they occurred.
We “propose a standard approach to be adopted across the industry by market participants involved in post-trade reporting,” FIX said today. This is “in order to shape the clarifications of Mifid post-trade transparency obligations.”
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