Market Analysis

Google Cloud, Norway’s sovereign wealth fund, and Swiss bank UBS have teamed up to support a bid to operate Britain’s real-time bond market transaction record, the fixed income technology firm spearheading the initiative told Reuters.

Last year, British regulators proposed creating a "consolidated tape" to aggregate market data from both stock and bond markets, with a bond data feed set to be prioritized. The goal is to enhance transparency and attract more investors to the UK capital markets.

While such systems have long been in place on Wall Street, the European Union recently approved legislation requiring trading platforms to share bond and stock price data with a centralized operator, for a fee.

Bond trading, typically conducted across various platforms or bilaterally rather than through exchanges, is less transparent, giving some market participants an information advantage.

The Financial Conduct Authority (FCA) of the UK announced it expects to begin the tender process to select a firm to manage the bond tape by the end of 2024, with the industry anticipating the system to be operational by late 2026.

Ediphy, a London-based technology provider specializing in fixed income markets, revealed on Wednesday that it is launching "fairCT" in collaboration with several partners, including Cboe Global Markets, FactSet, and TP ICAP, aiming to become the UK tape operator.

Chris Murphy, Ediphy’s CEO and former head of UBS’ Global FX, Rates, and Credit business, said confidence in the tape’s viability is growing after earlier regulatory efforts failed to materialize.

To ensure impartiality, Ediphy has partnered with various industry players, including Google's cloud division, Alphabet, to handle data storage, Murphy told Reuters.

“We need to avoid creating something that benefits only certain vested interests in the market,” Murphy emphasized.

When asked if any of the firms involved had a financial stake in the project, Murphy declined to comment.

While regulators and investors broadly support the idea of a consolidated tape, exchanges have resisted, seeking to protect their profitable data businesses. Banks and asset managers argue that their trades generate the data in the first place, so their participation is crucial.

Murphy stressed that UK regulators must strike the right balance to ensure the bond tape is affordable and encourage timely data submissions from participants, avoiding potential delays that could hinder its success.

“It’s all about finding the right mix of incentives and enforcement,” he added.

Paraphrasing text from "Reuters" all rights reserved by the original author.