London Stock Exchange seeks to challenge trading data overhaul

By Phoebe Seers

LONDON, June 9 (Reuters) - The London Stock Exchange Group (LSEG) has launched a last-ditch effort to thwart a regulatory move that seeks to boost the transparency of UK stock trading.

Julia Hoggett, CEO of the London Stock Exchange, which is owned by LSEG, said she may appeal to the government if Britain's Financial Conduct Authority (FCA) proceeds with a plan for a stock trade "tape" as proposed last year.

Hoggett's comments in an LSEG blog mark a fresh escalation in a stand-off with banks and others who have been encroaching on the stock exchange by trading stocks in-house themselves.

The FCA says its plan for a consolidated equities tape, a real-time feed combining equity prices and trades from multiple players, could bolster Britain's appeal in attracting stock market listings by making clear just how vibrant trading is.

The FCA is expected to finalise its plans in July.

In a consultation last year, the regulator proposed including some pre-trade data, such as the best bid and offer from UK venues that publish it. LSEG sells this data to investors, which keeps it hidden from public view.

Hoggett said the FCA's plan risked damaging the UK market, arguing that limiting the tape to post-trade data would be "more prudent and pragmatic" and could help prevent the erosion of "lit" venues like the LSE where buy and sell orders are visible.

"The UK now sits near the bottom of international league tables for the proportion of trading that takes place on 'lit' exchanges," she said, adding that this was partly because the FCA has made it easier than U.S. and European regulators for certain trades to move off-exchange.

In trading on June 5, around 33.5% of UK equity trades were carried out on "lit" exchanges, while in the rest of Europe the figure stood at 46%, according to BMLL Technologies data.

LSEG is also concerned that including pre-trade data — bids, offers and volumes before execution — could undermine transparency if investment banks do not contribute.

The Association for Financial Markets in Europe, a banking trade group, accused LSEG of prioritising its business interests above the needs of the market.

LSEG declined to comment on the allegation or the expected impact of the new tape on its revenues.

LSEG is the largest customer of Reuters, which provides news for its Workspace news and data platform and other products.

UK Finance, another trade group, said investors, asset managers and banks all support a tape that includes enough pre-trade data to be commercially viable.

"Only a full pre- and post-trade tape will provide investors a true reflection of the size of the UK market. It will also provide a single, comprehensive view of share prices and trades across all venues, lowering costs and improving access to information," UK Finance said.

An FCA spokesperson said: "We are engaging closely with market users across the board who strongly support the introduction of a tape. Our objective is to keep UK markets open, competitive and an attractive place to trade, invest and list."

(Reporting by Phoebe Seers, Nell Mackenzie and Lawrence White; Editing by Catherine Evans)