19.II Definition of EU equity pre- and post-trade transparency regulation

EU equity pre- and post-trade transparency regulation can be defined in a narrow or broad way. A narrow definition defines EU equity pre- and post-trade transparency regulation by merely taking into account the individual components of the term ‘EU equity pre- and post-trade transparency regulation’. A narrow definition would define EU equity pre- and post-trade transparency regulation based on its four components, namely: (1) EU regulation, (2) equity, (3) pre-trade transparency, and (4) post-trade transparency. By contrast, a broad definition does not only consider the term ‘transparency’ to be the amount of equity pre- and post-trade data published within a certain timeframe (narrow definition), but also includes (5) high quality publication and consolidation, as well as (6) ‘reasonable’ equity pre- and post-trade data prices. Under a broad definition of EU equity pre- and post-trade transparency regulation ‘publication’, ‘consolidation’, and ‘equity pre- and post-trade data prices’ are all a species of the genus ‘transparency’.1 A narrow definition does not consider publication and consolidation, nor equity pre- and post-trade data prices, to be part of the definition of EU equity pre- and post-trade transparency regulation.

Both definitions have their pros and cons, but my conclusion is that the broad definition suits best with the current EU situation. The current EU situation is characterised by a highly fragmented equity market, as well as new technological features, such as algorithmic trading. The result of fragmentation and technological innovation is higher demand for equity pre- and post-trade data. A broad definition of EU equity pre- and post-trade transparency regulation is most aligned with the value data users nowadays attach to equity pre- and post-trade data. A broad definition includes all EU requirements for equity pre- and post-trade transparency, with the term ‘transparency’ being a genus that includes several species, such as mandatory disclosure, publication and consolidation arrangements, and the price of equity pre- and post-trade data. I realize that a broad definition of EU equity pre- and post-trade transparency regulation is not perfect. A main disadvantage is its unclarity. A broad definition makes it hard to assess where the definition ends. For example, it can be argued that competition law issues, such as market power of data sellers, can also fall under the definition. Whatever the case may be, a broad definition of EU equity pre- and post-trade transparency regulation describes best what the current priorities for the EU equity market are, such as the establishment of a so-called consolidated tape and ‘reasonable’ equity pre- and post-trade data prices. A narrow definition would leave these EU priorities outside the scope. Hence, a narrow definition would not describe equity pre- and post-trade transparency in all its facets.