The over-the-counter (OTC) derivatives market in Europe is taking a step towards improved transparency — naming a Dutch firm to compile and distribute market data.
The European Securities and Markets Authority (ESMA) has tapped Etrading Software (Netherlands) B.V. to serve as the inaugural “consolidated tape provider” for OTC derivatives, following a review of its initial application against criteria set out in the European investor protection rules, known as Markets in Financial Instruments Regulation.
Among other things, that review, which launched in January, assessed the firm’s ability to meet its standards for data quality, resilience and disseminating consolidated market data.
The naming of a consolidated tape provider for the OTC derivatives market is intended to “enhance market transparency and efficiency” by consolidating post-trade data from various trading venues into a single and continuous electronic data stream.
“This consolidated view of market activity will help market participants to access accurate and timely information and make better-informed decisions, leading to more efficient price discovery,” ESMA said.
The regulator noted that it will now invite the firm to apply for authorization — which, once approved, will give it the job of providing consolidated data on OTC derivatives for five years.
“Today’s decision represents an important milestone in enhancing transparency in OTC derivatives markets,” said Natasha Cazenave, executive director of ESMA, in a release.
“The consolidated tape for OTC derivatives will contribute to a more transparent and integrated EU market, benefiting investors and market participants across the European Union,” she said.
Cazenave added that it’s also an important step towards establishing consolidated tapes in various financial markets in the EU, and enhancing overall market transparency.
Last year, ESMA named the initial tape providers for equity and bond markets too.
