Efama: Data consolidation is a priority under MiFID II
The European Fund and Asset Management Association (Efama) has proposed a blueprint for a European consolidated data tape (ECT) to provide greater certainty among investors over prices, best execution, valuations and performance measurements.
The liberalisation of trading venue regulation under MiFID has brought many benefits for market participants, but it has also highlighted weaknesses, the association said.
“The proliferation of trading venues has exposed weaknesses in the regulation of data quality and aggregation. This in turn has led to great difficulties in determining with certainty market prices and volumes.”
All market participants have a keen interest in good quality trading data and efficient mechanisms for data consolidation, however investment managers not only need good data to ensure they are receiving best execution for their clients, but also in order to correctly value the portfolios and funds they manage, it said.
The markets’ inability to offer efficient solutions has been frustrating, especially as the costs for data feeds have continued to rise. Data providers and aggregators have divergent commercial interests and data ownership is diffused, leading to less than satisfactory, expensive data consolidation offers.
Whilst market users might be expected to support a competitive commercial solution, the blueprint deals with a single official ECT, reflecting the absence to date of a comprehensive and enforceable solution. Commercial solutions may address these issues ahead of any imposed ECT, but Efama believes standards will still need to be set and supervised by the European Securities and Markets Authority (ESMA).
Peter De Proft, Efama director general, said “MiFID II must improve data quality and aggregation provisions, imposing binding minimum quality standards for trade reporting and vigorously fostering data aggregation.”
The investment management industry will greatly benefit from the appropriate strengthening of MiFID provisions on data quality and aggregation and it would contribute to better equity trading in Europe, he said.