[ F I X E D
I N C O M E
L E A D E R S
TRACE-STYLE SYSTEM
UNLIKELY TO SOLVE
EUROPEAN FIXED INCOME
DATA PROBLEMS
FRAGMENTED NATURE OF EUROPEAN REGULATORY
AUTHORITIES MEANS A TRACE-STYLE SOURCE OF
FIXED INCOME DATA IS UNLIKELY TO BE REPLICATED
IN EUROPE.
T
he lack of unified, consistent
fixed income trade data in
Europe is unlikely to be solved
through the implementation of
a similar system to the Trade
Reporting and Compliance Engine
(TRACE) operating in the US.
Buy-side speakers highlighted
that while the use of TRACE has
increased transparency for North
American fixed income market
participants, it would be extremely
difficult to implement a similar
system in Europe due to fragmen-
tation of regulatory authorities and
data sources.
James Wallin, SVP, fixed income
at AllianceBernstein, pointed out
that TRACE does provide markers
for how European markets can im-
prove data transparency and access
in the absence of a consolidated
tape for fixed income data.
“TRACE is consistent, it’s clear
where the data is coming from, it’s
readily available to all and there is
a decent ability to provide input
from market participants into the
trade process,” he said. “Unfortu-
nately, the European regulatory en-
vironment is much more fragment-
ed, the data dissemination and
S U M M I T
2 0 1 8 ]
gathering environment is confused,
not only because I don’t think the
regulators have a good sense, look-
ing down into the pipe, as to where
the data is coming from.”
Wallin also pointed out that while
European regulators have created
a series of data and transparency
mandates, they are not having the
intended effects to benefit the
market.
“Europe is well along in terms of
mandating transparency, reporting
and rules, but the problem is that
there is a brick wall due to the
inflexibility of the mandate; the
“TRACE is consistent,
it’s clear where the
data is coming from.”
JAMES WALLIN, ALLIANCEBERNSTEIN
mandate doesn’t lend itself to inno-
vation,” he added. “The US is very
kind to allow these kinds of utili-
ties to function as they should, and
Europeans can learn from this.”
Alex Sedgwick, head of fixed in-
come market structure at T. Rowe
Price, said that while it was im-
portant to recognise the improve-
ments to market transparency
brought in by TRACE, the different
natures of the market structures
means it would be difficult to repli-
cate in Europe.
“The one takeaway for Europe is
that, generally speaking, there is
far more focus on electronic trad-
ing and technology throughout
the trade lifecycle. In part, that’s
a function of MiFID II but I think
it pre-dates it in a lot of ways.
Having a centralised regulator and
single market in the US does make
it easier to create a utility like
FINRA that collects all of the data
in a centralised manner,” Sedg-
wick said.
Issue 58 // TheTradeNews.com // 35