LSEG’s Hoggett warns ‘free-rider’ possibility might undermine UK equities pre-trade consolidated tape

LSEG has cautioned in opposition to introducing a pre-trade consolidated tape for equities in the United Kingdom, caution that if designed incorrectly, it will weaken the United Kingdom marketplace, fairly than support it.  

In a just lately revealed article, Julia Hoggett, leader govt of the London Inventory Alternate and head of virtual and securities markets at LSEG, argues that efforts from the Monetary Habits Authority (FCA) to handle liquidity fragmentation, akin to exploring the advent of a pre-trade consolidated tape for UK equities, would solely be efficient if all marketplace individuals give a contribution.  

Recently, the FCA is predicted to submit a pre-trade tape gentle for UK equities in the following few weeks.  

In particular, Hoggett makes reference to a ‘free-rider’ drawback, which permits individuals to look costs at the tape, however with out the duty to percentage their very own costs and knowledge.  

She feedback: “This can be a little like taking part in playing cards with any individual who needs to look what everybody else is protecting however helps to keep their very own hand on the subject of their chest. That is every so often framed as a controversy about protective an incumbent; in truth, it is a controversy about fighting a framework that shall we some individuals use transparency with out contributing to it.” 

Specifically, Hoggett issues to companies akin to systematic internalisers (SIs), which might receive advantages from a possible tape with out including their very own information, resulting in decreased transparency.  

Learn extra – SI waft necessary for a a hit consolidated tape, say mavens

Additionally, the object additionally is going directly to argue that the FCA will have to cope with 4 key problems previous to launching a pre-trade tape, particularly round wide participation at the tape, operational resilience, coverage in opposition to latency arbitrage and income sharing.  

Supporting those proposals, Hoggett provides: “Public coverage and law should recognise that there’s a possibility to marketplace integrity, and in the end to the nationwide pastime, if inventions like a pre-trade tape don’t seem to be offered inside the suitable framework. It is usually the case that introducing a harmful framework and assuming that any breakage to the device may also be corrected afterwards is also taking part in rapid and free with marketplace integrity.” 

Moreover, she is going on to indicate: “If the FCA isn’t ready to continue with warning and give protection to marketplace integrity, it can be very important to invite the Govt to step in as a substitute.” 

Business reaction 

Following the object’s e-newsletter, trade our bodies such because the Affiliation for Monetary Markets in Europe (AFME) have come ahead in line with Hoggett’s proposals.  

In particular, AFME’s answer argues that introducing a post-trade-only tape might “possibility overlooking what the marketplace in truth wishes”, and that complete transparency inside UK markets calls for a pre- and post-trade resolution from release.  

“The point of interest will have to be on results, together with making improvements to get admission to to top quality information, supporting efficient value discovery and making sure traders take pleasure in festival – no longer on keeping present fashions,” AFME affirms.  

Learn extra – AFME backs FCA UK fairness consolidated tape framework session 

Regardless of this, the trade frame additionally makes reference to Hoggett’s argument round Sis, wondering that price of together with those quotes within the tape, highlighting that those quotes are already publicly to be had and freed from fee.  

Discussions round this matter vary on the other hand, and at a up to date panel at TradeTech in April, buy-side mavens agreed that SI waft within the consolidated tape and having this information give a contribution to public value discovery for higher transparency was once no longer simply recommended, however if truth be told very important. 

Supporting this, Jim Kaye, govt director of FIX, defined in November 2025: “As of late, traders assessing the Ecu marketplace will totally cut price as much as one-third of quantity as a result of the best way trades are reported […] process going down off-venue, for instance in systematic internalisers, is discounted, while in the United States is it counted and accounts for just about part of all the marketplace.” 

As debate over the FCA’s resolution to doubtlessly come with pre-trade information in a UK consolidated tape intensifies, what’s going to transpire as this panorama continues to conform will most probably stay firmly within the highlight for plenty of around the trade over the approaching weeks and months.