Stock-Trading Problems Push European Investors to Call for Data Changes
Investors in Europe learned the hard way this month that key structural differences between some of the region’s main stock exchanges and their U.S. counterparts put them at a costly disadvantage when it comes to trading stocks.
On Oct. 19, technical glitches halted trading on two separate occasions, risking potential losses for investors that trade stocks on five of the six European marketplaces owned by Euronext NV, including those in Paris, Amsterdam and Lisbon. The breakdown bolstered arguments for Europe to follow the U.S. and introduce a consolidated tape—an electronic system that collates real-time prices for stocks that trade on different marketplaces simultaneously.
Such a system, some market participants argue, would have allowed investors to continue trading stocks on alternative venues—including Cboe Global Markets Inc.’s Europe-based marketplace, the London Stock Exchange Group PLC’s majority owned Turquoise trading facility, and Aquis Exchange PLC—despite the Euronext glitches. That is because the consolidated-tape prices would serve as a reference for investors to trade stocks on different marketplaces. Instead, when Euronext’s exchanges went down investors struggled to trade even the biggest corporate names such as Paris-listed luxury-goods giant LVMH Moët Hennessy Louis Vuitton SE or Amsterdam-listed Just Eat Takeaway.com NV, a big food-delivery company, because pricing was unavailable or difficult to access.
A breakdown in Euronext’s platform risks disrupting trading across an increasing number of Europe’s exchanges given the pan-European operator is in the process of acquiring the Italian exchange from the LSE for about $5.1 billion. That deal would expand the number of trading venues it owns to seven.
The consolidated tape would save investors “billions of euros…provide better investment outcomes for investors [and] promote greater competition and resilience” among trading venues, said Niki Beattie, chief executive of Market Structure Partners and an independent, non executive chair at Aquis. Market Structure Partners, a U.K.-based consulting firm, in October published a report for the European Commission on the merits of establishing a consolidated tape. That followed a call in December from the European Securities and Markets Authority, the regional regulator, to establish a consolidated tape for stock quotes.