(June 22): Bond investors gained access to a single stream of UK trading data after a transparency initiative that has been years in the making went live.
A consolidated tape of market transactions was launched by ETS Connect UK on Monday, capturing more than 95% of bonds traded across venues. It comes more than two decades after the US introduced TRACE, a system that aggregates debt trading data.
The event marks a milestone in a bid to make UK markets more competitive and follows a lengthy consultation and legal challenge that threatened to delay the project. Improvements to the availability and scope of data are expected to unlock the next wave of algorithmic and electronic trading growth.
The tape “will change how bond market activity is seen and understood", said Sassan Danesh, CEO at ETS Connect UK. The unit of Etrading Software was awarded a contract by the Financial Conduct Authority to run the consolidated system.
The data is not limited to British bonds and will also capture UK trading activity in sovereign and corporate debt issued elsewhere.
Discretionary fixed-income managers, credit-focused hedge funds and long-only asset managers with meaningful bond exposure would be among the initiative’s biggest beneficiaries, Neudata, a data advisory firm, said in a statement.
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“For smaller firms in this group, the effect is more of a leveller versus the competition,” it said. A “comprehensive market view that was previously the preserve of those who could afford multiple data feeds becomes available cheaply.”
The tape may hurt pricing venues that sell model-derived estimates of where bonds should be priced, Neudata said in a report. Bloomberg LP, the parent of Bloomberg News, aggregates and distributes trading data throughout Europe.
Plans for a European bond tape, as well as UK and European equity tapes, are still in motion.
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