13.V.1 Reasons for the lack of equity CTPs

ESMA initially found three reasons in the consultation leading up to the ESMA Review why no CTP for equity instruments had emerged. First, the lack of a business case and limited rewards of providing an equity consolidated tape. The reasons for the lack of financial incentives for CTPs include the high degree of fragmentation in the EU equity market (a CTP would have to negotiate market data agreements with over 170 RMs, MTFs, and APAs) and the MiFID II requirement to offer equity post-trade data for free 15 minutes after publication.1 Second, MiFID II covers strict regulatory requirements in running an equity CTP (e.g. collecting 100 percent equity post-trade data, both from RMs/MTFs and APAs. Third, an equity CTP faces competition from non-regulated entities, such as data vendors, who have in ESMA’s view significant competitive advantages by not being subject to the same regulatory framework.2 The vast majority of respondents to the ESMA consultation agreed with ESMA’s analysis.3 Based on stakeholder input, the final ESMA Review adds an additional reason and some specifications to the first three. The fourth and final reason ESMA mentions in the review is the lack of equity post-trade data quality, in particular from APAs (e.g. inconsistent data).4 ESMA agrees with the stakeholders that data quality issues (fourth reason) needs to be resolved as a priority. The Commission’s MiFID II Consultation intends to verify the ESMA observations and conclusions.5