The European Union has selected a UK-based fintech company to develop a consolidated tape for derivatives, marking a significant step in increasing market transparency. The decision, announced by the European Securities and Markets Authority (ESMA), entrusts the project to London-based firm, which will compile real-time trade data from across the bloc.
Details of the Deal
The contract, valued at approximately €10 million, will see the fintech create a centralized feed of derivatives transactions. This tape is intended to provide investors and regulators with a clearer view of market activity, reducing information asymmetry. The project is part of the EU's broader Capital Markets Union initiative, which aims to deepen and integrate European capital markets.
According to ESMA, the consolidated tape will cover exchange-traded derivatives and over-the-counter derivatives, with data updated at least every 15 minutes. The service is expected to launch in early 2025.
Impact on Transparency
"This is a landmark decision for European markets," said a spokesperson for the selected fintech. "Our technology will bring unprecedented transparency to derivatives trading, benefiting all market participants." The move has been welcomed by industry groups, who have long called for a consolidated tape to improve price discovery and reduce trading costs.
UK-EU Relations
The selection of a UK firm comes despite ongoing tensions between the EU and UK post-Brexit. It highlights the UK's continued strength in financial technology, even outside the bloc. However, some EU officials expressed concerns about relying on a non-EU company for critical market infrastructure.
