Financial markets: Brussels calls for an integrated database
A study backed by Brussels recommends creating an organization capable of tracking stock transactions and fining stock exchanges and brokers who provide poor data. An essential step for the successful completion of the Capital Markets Union.
How to strengthen European capital markets? With Brexit approaching, the issue becomes more pressing. On September 24, the President of the European Commission called for the completion of the Capital Markets Union . This initiative intended to strengthen the integration of the financial markets of the Old Continent, originally launched in 2015, has so far only given rise to scattered and incomplete measures. And twelve years after the 2008 crisis, European markets are far from unified.
“A truly single market cannot exist without a more integrated view of transactions,” said Ursula von der Leyen. The European Commission has asked London-based consultancy Market Structure Partners to look into the matter. The study published this Wednesday gives some clues. The specialist consultants recommend in particular the creation of a consolidated database on market transactions. This would be managed by a self-regulated body, that is to say from the financial industry, which would work closely with the supervisory authorities.
This is the system that exists in the United States, where the Finra (Financial Industry Regulatory Authority), which collaborates with the SEC (Security and Exchange Commission), has the power to collect information on market transactions from the stock exchanges and financial intermediaries (brokers). Brussels has dreamed of it for a long time. With more than thirty negotiation systems, financial Europe is particularly fragmented. One of the problems is that the various stock exchanges and multilateral exchange platforms, scattered in the various countries, certainly publish data on volumes, the number of transactions or even prices, but each does it in its own way. Thus, the data are difficult to compare or reconcile.
Investors, like fund managers, complain about it. For them, the environment is still too opaque to allow them to have an exact idea of the costs of trading. It is difficult, under these conditions, to choose the platforms best suited to their transactions.
For British consultants, it is pointless to wait for spontaneous self-regulation on the part of market professionals. They suggest that the body responsible for collecting market data should have the power to impose fines if the information provided is insufficient or of poor quality.
“The benefits of having a consolidated market database clearly outweigh the cost of setting it up. “ This one is estimated at 11 million. Its operating costs would essentially be covered by the compulsory membership of market intermediaries.