Being a voluntary contributor to The European Securities and Markets Authority’s (ESMA) equity CTP will entice firms to trade smaller markets, venues say.
ESMA issued an initial list of data contributors for the equity consolidated tape provider (CTP) last week.
A total 183 individual contributors are named, 109 of which are mandated to contribute data. Of the 47 parent groups of these markets, 18 are fully or partially mandated.
The remainder have been attributed ‘opt-in’ status.
One venue told Global Trading that smaller markets may benefit from providing their data, making a wider range of firms aware of them and increasing their industry presence.
An ESMA spokesperson agreed, telling Global Trading, “Opting into the equity CTP enables data contributors to participate in the associated revenue redistribution scheme and to gain visibility to a large set of potential investors. We believe that it would benefit all stakeholders if all trading venues opted in eventually.”
However, they acknowledged that this may be a burdensome process for smaller venues.
“Contributing data to the CTP entails IT development efforts and related costs. Those costs may appear high in the short term whereas the gains of increased visibility may only show in the medium term.”
If opt-in firms decide to contribute to the tape, they must provide data to the CTP within 30 days of notifying ESMA of their division to do so. Once they have done so, they are required to provide data for the full five years of the CTP’s licensing period.
“Nonetheless, we believe that in the medium term, all venues contributing to the CTP will benefit from it, either directly via the associated revenue redistribution or indirectly via the increased visibility of such smaller markets,” the ESMA spokesperson affirmed.
Under MiFIR, market operators or investment firms operating an SME growth market with an annual trading volume of shares below 1% of the EU’s are not required to provide data to the CTP, so long as they are not part of or linked to a larger group that exceed the threshold or their market accounts for more than 85% of the annual trading volume of shares initially admitted.
ESMA outlined, “Not all trading venues will be required to contribute data to the equity CTP, once it will be established. Specifically, smaller trading venues that either do not belong to a large group or have a high concentration of instruments first listed on their platforms are not obligated to submit data to the CTP, unless they choose to participate in the regime.”
The regulator is expected to name a CTP before the end of the year. Currently, only EuroCTP remains a contender in the process.
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