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Pre-trade consolidated tape: a must-have for best execution

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European Investors has taken notice of recent public statements on the desirability of the pre-trade data consolidated tape. We believe increased transparency re. pricing and execution venues, will facilitate better, more efficient and fair price formation, best execution and do away with the artificial competitive advantage of Systemic Internalisers (SIs).

European Investors has consistently advocated the consolidated tape. We are of the view that the consolidated tape addresses the fragmentation of the markets, currently a key hurdle to the growth and functioning of the Capital Markets Union in Europe. Europe needs strong and efficient capital markets, lit markets, with best execution being guaranteed. In view of our mission to promote the interests of the retail investor community, European Investors is fully in favour and therefore wholeheartedly supports the objective of the MiFIR review to require the publication of pre-trade data on the consolidated tape. In European Investors’ view, there is a simple argument in favour of the pre-trade consolidated tape: the attainment of best execution. It is only with the pre-trade data being at the disposal of all market participants, that market participants can actually establish on which markets their transactions can be performed at the most favourable (i.e. the lowest) price. This, de facto, is an important catalyst for true competition among trading venues, clearly promotes the interests of retail investors and facilitates the most optimal allocation of their financial contribution to the EU economy.

European Investors sees the issue of the tick-sizes as an altogether distinct matter. European Investors supports the view that retail investors’ interests will suffer considerably were SIs enabled to execute trades off-exchange below the tick-sizes set in accordance with Article 49 of the MiFID II. The regime of Article 49 MiFID II ensures that SIs cannot execute dark trades below the Large-in-Scale (LIS) size. Indeed, the activities of SIs must be limited to large orders unless they are dealing at a price that is at a valid tick and has been made pre-trade transparent through a quote.

As said, we are expressing ourselves given a concern that the topic of the tick-sizes requirement for SIs risks being taken for a dismissal of the pre-trade data consolidated tape as such. On behalf of European retail investors, we will continue to remain strongly in favour of the pre-trade data consolidated tape.

Furthermore, European Investors takes the opportunity strongly to commit support to the call for the outright and categoric ban on payment for order flows (PFOF).

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