An OTC tape is on the horizon – but how far off?

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An OTC tape is on the horizon – but how far off?

ESMA’s consultation on the criteria for establishing and assessing the effectiveness of investment firms’ order execution policies has exposed the diversity of opinion on the merits of a consolidated tape for OTC derivatives.

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Illustration: iStock

The merits of consolidated tape – a centralised system for disseminating real-time trading information that aggregates data across different venue types – have been widely discussed by European investors, regulators and market participants across all asset classes.

In the US, the trade reporting and compliance engine (Trace) has been providing consolidated data for over-the-counter (OTC) debt securities since the early 2000s. The European Commission first outlined its plans for a similar system in 2010, but concerns around market data quality, the sheer number of data providers, and complex licensing policies have stymied progress.

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Source: ESMA

However, there is now a timeline in place. Bond market consolidated-tape-provider (CTP) evaluation will take place during the first three quarters of 2025, with authorisation expected before the end of next year. The evaluation process for the equity CTP is scheduled for the final three quarters of next year and the chosen provider should be authorised by mid-2026.

OTC derivatives market participants will have to wait a little longer. According to the European Securities and Markets Authority (ESMA), the evaluation process for this tape is unlikely to be completed until the third quarter of 2026 and authorisation might not happen before the end of Q1 2027.

According


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