In light of the MiFIR/MiFID II review (which entered into force on 28 March 2024, with transposition deadlines for MiFID II amendments set for 29 September 2025), this consultation package no 2 addresses significant changes aimed at establishing a framework for Consolidated Tape Providers (CTPs) and Data Reporting Service Providers (DRSPs).
ESMA focuses on the Regulatory Technical Standards (RTS) that will determine how market data is collected, processed, and distributed, ultimately reaching retail investors and market participants alike. Feedback is sought on real-time data transmission, data quality, security measures, and revenue redistribution mechanisms for CTPs. Additionally, it outlines criteria for selecting future CTP applicants and requests input on proposals for business clock synchronisation.
ESMA is expected to publish the final RTS related to input/output data for CTPs, along with other relevant mandates, by December 2024. This timeline will ensure alignment with the broader MiFIR/MiFID II framework, providing clear requirements for the selection process of equity CTPs. The selection procedure itself, critical for ensuring that the CTP framework is functional and transparent, will be influenced by these standards and should proceed without delay. Furthermore, ESMA’s guidelines on business clock synchronisation and other technical elements are expected to be incorporated within this time frame.
The Consolidated Tape (CT) will play a crucial role in reducing market fragmentation and supporting the development of a more unified Capital Markets Union. For both retail investors and market participants, access to real-time, transparent market data is essential. Beyond helping retail investors evaluate whether they are receiving best execution on their trades, the CT will also provide pre-trade (anonymised) European Best Bid and Offer (EBBO) data, which reflects the highest bid and lowest offer prices in certain lit markets. This data will offer insights such as price quotes and depth of order books, while post-trade data will cover executed trades and prices.
This combination of pre- and post-trade data will indeed give investors a more comprehensive view of market liquidity and pricing trends as opposed to the current data streams available, empowering them to assess the fairness of their trades and overall market conditions.
The CT will need to be an empowering tool that allows investors to make more informed investment decisions, particularly in assessing market opportunities and ensuring best execution across fragmented European markets. However, while the CT promises to be a vital resource for retail investors and market participants, the technical nature of this consultation and the complexities surrounding the system’s development may limit broader engagement from retail investors and consumer groups.
Key BETTER FINANCE Feedback
1. Data Accessibility & User-Friendliness
BETTER FINANCE stress that retail investors need a free, and understandable access to consolidated market data. Therefore, data must be available in formats that are easy to use and interpret, so that retail investors can make informed investment decisions. The data should not require any advanced technical knowledge and should be presented in a straightforward way that allows non-professional users to fully benefit from it. CTPs should be designed with retail investors in mind, ensuring that the system is not only scalable and secure but also accessible to smaller, non-professional investors.
2. Technical Standards (Section 3)
Transmission Protocols: we support the identified technical criteria (performance, reliability, security, and compatibility) while we convey to ESMA our consideration for accessibility and cost-efficiency. Retail investors should not bear the burden of high costs or face barriers when accessing market data.
Data Format: While we appreciate that JSON is a flexible and widely used data format, we also encourage ESMA to evaluate alternative – viable market-wise – options like SBE, which may provide better performance for large, real-time data feeds. However, JSON or similar user-friendly as CSV formats should be maintained and therefore translated for retail investors, allowing them to access and download data easily without needing relying on complex, proprietary formats. We believe a fully fledged CTPs should convert data into formats that serve retail investors’ needs, ensuring that the technical efficiency of data transmission doesn’t compromise accessibility.
Real-Time Data: Retail investors do not require the “ultra-low latency” demanded by professional traders. While data should be provided as quickly as possible, leniency on latency for retail users can make the system more inclusive without compromising. their ability to make informed decisions. Retail investors need timely data to be empowered to evaluate best execution (conducted post-trade), since pre-trade market view will not be consolidated at this stage.
3. Retail-Specific Data
We propose the introduction of retail-specific trade flags in core and regulatory data, enabling greater visibility into retail-driven market activity. This will help retail investors monitor market liquidity and ensure their trades are executed at the best possible prices. By including these retail flags, market data will become more transparent, empowering retail investors to better understand and participate in the markets.
4. Revenue Redistribution (Section 4)
We advocate for an inclusive approach to revenue redistribution. Smaller trading venues, as well as dark pools, should be incentivised to participate in the consolidated tape, ensuring that market reporting transparency is comprehensive. Without appropriate incentives, smaller venues might opt out of the system (as permitted in level 1), which would undermine the usefulness of the consolidated tape for retail investors.
5. Educational Focus
A key part of making the consolidated tape work for retail investors is ensuring that it comes with educational tools. Many retail investors lack the expertise to interpret complex financial data, and we believe the CTP should include resources that simplify market data, making it easy for retail investors to understand what they are seeing. This could include visual tools, simplified explanations, and tutorials on how to use the data for better decision-making.
For the detailed response to the specific question, please refer to pdf provided below.