Europe's stock exchanges are currently in intensive discussions with the European Securities and Markets Authority about the framework conditions for the market data business, which has become increasingly important for many trading venue operators.

„ESMA makes very detailed specifications,“ Rosa Armesto, Managing Director of the Association of European Securities Exchanges (Fese), said in an interview with Börsen-Zeitung. This applies, in particular, to the question of what stock exchanges can charge for the provision of data. „ESMA insists on simple pricing models, but these often do not do justice to the complexity of the business,“ she says.

Even if the costs for producing the data are often the same, this data is used very differently– for example by small brokers on the one hand, and large investment houses on the other. „We therefore need differentiated prices for data," she says.

The EU market regulation Mifir demands that pricing is set out „on a reasonable commercial basis“. That depends on what the customers uses the data for. „They also have to pay different prices for additional applications,“ says Armesto. And it depends on how data will be fed into the planned uniform data ticker, the Consolidated Tape.

The Council and EU Parliament have completed the review of Mifir, and agreed on the so-called Consolidated Tape. But exactly how the tape should be designed will only become clear when ESMA defines the technical details, Armesto explains. Her predecessor as Fese's Managing Director, the association's current Chief Advisor, Rainer Riess, underlines the importance of this clarification: „A lot depends on the design of the Consolidated Tape – to what extent it enables certain applications, for example when verifying the execution of transactions.“

It will be crucial that the uniform data ticker actually covers the needs of customers. „That is far from certain,“ says Riess, who many in the Frankfurt financial centre know from his time at Deutsche Börse. He points out that investment banks might not even buy the data from the Consolidated Tape, if it does not offer any added value compared to the data sets to which they already have access.

Meanwhile, the selection process for the CT is progressing. A few days ago, there was the opening meeting of the group of data experts who are now supposed to propose the details, such as the calculation of prices and discounts. There will be a tender process for the provider of the CT, with a bond tape to be authorised next year, followed by an equities tape. The selection process will take into account many aspects, from technology to governance and sustainability.

When looking more broadly at the problems facing stock exchanges, issuers and investors in the EU, the need for capital is the focus for Armesto. „Europe urgently needs more capital,“ the Spanish national emphasises. Europe's competitiveness depends on the question of whether it will be possible to mobilise more private capital. Not only institutional investors played an important role, but also private investors. „We have to manage to channel a larger part of the capital that is in savings accounts into the financial markets," she says.

Armesto and Riess point to Sweden's example. Scandinavia is doing very well in attracting private investors to the capital market. Now it's about transferring the experiences from Scandinavia to other EU countries. „The recipe for success is simplicity and tax breaks,“ says Riess. Sweden has shown how it's done. „Swedes have an investment savings account, the ISK – just like Americans have the 401k. And there are IPOs of local companies in Sweden.“

When asked about their expectations for progress in the Capital Markets Union, which has been worked on for many years, Riess and Armesto express caution. In the legislative period of the EU Parliament and the EU Commission that has now begun, the willingness of national governments to hand over competencies to Brussels appears to be modest. „The will to integrate is limited,“ observes Riess.

Many people are currently talking about the Capital Markets Union. „But I don’t expect much real progress,“ says the Fese chief advisor. There is broad agreement that Europe needs more capital to finance the real economy, and its transformation.

With regard to a central element that is currently being hotly debated in the debate about CMU, namely the question of whether ESMA should be given more powers, Fese takes a neutral stance. „Whether national supervisors or ESMA take care of it, what is crucial is that we see identical implementation of the EU requirements throughout the EU,“ says Armesto. All market participants must be treated equally. There should be no regulatory arbitrage.

Riess says that EU regulation should „not lose sight of the crucial point.“ Europe needs deep and transparent liquidity pools. But the reality is different, with more than 400 execution venues. „Access to liquidity in the EU is still highly complex and expensive,“ Riess states. „The fragmentation is damaging our competitiveness.“

European companies have often not found the financing conditions and capital markets they want in the EU. That's why some companies left Europe for the USA. This applies not only to young companies that are in the scale-up phase, but also to traditional companies such as Linde, Total Energies or the Spanish construction group Ferrovial.

Given this background, would it be helpful if stock exchanges merged? Riess reminds us that there have been many consolidation steps in recent years. Euronext, for example, contributed to the consolidation of the stock exchanges. „In order to further advance consolidation,“ emphasises Riess, „it is crucial that regulatory differences within the EU disappear.“ The technological infrastructure is already there.