ESMA’s selection of Etrading Software as Consolidated Tape Provider for OTC derivatives is another piece of a project that has been assembled market by market rather than delivered whole. Bonds and equities tapes have followed their own separate procurement tracks under MiFIR, and OTC derivatives — opaque, bilateral, dealer-quoted — is arguably the hardest instrument class to consolidate into a single reference feed. Etrading Software’s background is in fixed-income and derivatives connectivity infrastructure, not consumer-facing market data, which tells you ESMA is optimizing for plumbing that can ingest messy OTC reporting streams rather than a slick terminal product.
The commercial questions that have dogged every other CTP award in Europe apply here too: who pays for the tape, what data contributors are compelled to submit, and whether buy-side firms actually change behavior once the feed exists. OTC derivatives data has historically been the domain of trade repositories and dealer desks guarding proprietary flow, so getting contribution obligations and latency standards right will matter more than the vendor logo on the contract.
A consolidated tape is only as useful as the reluctant contributors forced to feed it.
Watch for ESMA’s technical standards on contribution and licensing terms, and for how this OTC derivatives tape timeline lines up — or doesn’t — with the equities and bonds tapes already underway.
The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, has selected Etrading Software (Netherlands) B.V. as the Consolidated Tape Provider (CTP) for over-the-counter (OTC) derivatives.
— Finextra
