The Association for Financial Markets in Europe (AFME) welcomes the Financial Conduct Authority's (FCA) consultation on the future of UK equity market structure, including proposals for a consolidated tape (CT) incorporating both pre-trade and post-trade data.
The reforms represent an important step in strengthening the transparency, efficiency and competitiveness of UK equity markets, while preserving the diversity of execution models that underpin liquidity and investor choice.
Adam Farkas, Chief Executive of AFME, said: “The FCA’s reforms represent a significant milestone for UK equity markets.
“The decision to move forward with a consolidated tape, including both pre-trade and post-trade data is particularly welcome. If implemented effectively, it has the potential to improve price discovery, strengthen investor confidence and enhance the overall attractiveness of UK markets.
“We welcome the FCA's recognition that UK equity market structure is broadly functioning well and continues to support healthy competition, innovation and investor choice across a range of execution models. The focus should now be on delivering the tape at pace and in a way that maximises its value for investors and the market as a whole.”
Consolidated Tape
AFME strongly supports the establishment of a UK consolidated tape and welcomes the FCA’s confirmation that it will incorporate both pre-trade and post-trade data from the outset. This is key to ensuring the tape’s commercial viability and practical usefulness for market participants.
AFME also welcomes the FCA's proposal for an interim market data service, providing free access to aggregated UK equity market data while the consolidated tape is being developed. Together, these measures can help showcase the depth and quality of UK capital markets to investors and issuers globally.
AFME also supports the FCA's objective of providing a more comprehensive and accessible view of market pricing, including best bid and offer information across execution venues. AFME notes that the FCA will consult further on the most appropriate approach to incorporating SI quotes within the overall framework, and will provide detailed feedback on this point.
To maximise the effectiveness of the consolidated tape, AFME highlights the importance of the following three principles:
- High-quality, standardised data, including best bid and offer information with appropriate attribution
- Proportionate and operationally feasible data contribution requirements, including for investment banks
- Fair, transparent and sustainable pricing and licensing arrangements to encourage widespread adoption
AFME also notes that a consolidated tape on its own will not solve the broader issues around the cost and availability of market data. More comprehensive reforms to the UK’s Reasonable Commercial Basis (RCB) framework are still needed to deliver a long-term solution for data users.
Equity Market Structure
AFME welcomes the FCA's conclusion that there is no need for radical reform. AFME continues to believe that the UK’s regulatory framework for secondary market trading of UK shares is broadly effective and supports well-functioning markets. The FCA's assessment that UK market evolution has been consistent with developments in other major markets is aligned with AFME members’ experience.
Investors’ access to a diversity of trading mechanisms is a key strength of UK markets. Alongside exchanges and other trading venues, banks play a critical role in providing additional bilateral liquidity to investors, helping facilitate efficient execution - particularly for larger and more complex transactions. Preserving access to this liquidity is essential to maintaining competitive markets and delivering the best outcomes for investors. Any future reforms should preserve this diversity and avoid inadvertently limiting investors' ability to access liquidity through the channel best suited to their needs.
As implementation progresses, regulators should seek to provide a period of regulatory stability. This will help provide the confidence and certainty that global investors need to continue investing in UK equities.
AFME welcomes the FCA’s continued engagement with industry and looks forward to working closely with policymakers and stakeholders as implementation progresses. Close cooperation will be essential to ensure the reforms deliver tangible benefits for investors, issuers and the broader UK economy, while preserving deep and resilient liquidity across all trading channels.
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