Draft tender documents for the bond consolidated tape (CT) are expected by the end of the month, but there are still inconsistencies around market definitions.
Some components to the tape’s platform have been detailed in ESMA’s study on data formats and transmission protocols, published last week, but this is far from comprehensive, says CT bidder Bondtape.
CEO-designate Neil Ryan told The DESK: “Although it’s a basic set of issues, it’s still not well understood and it’s a live issue being debated alongside the tenders. We want to contribute to supporting the market’s understanding of these confusing concepts to develop a common language.”
Data standard and protocol harmonisation can be achieved during the initial licence of the CT, but this relies on its success and market value, Bondtape said.
“We believe that, in order for the CT to succeed, it will have to offer and provide a variety of interfaces and protocols to ensure that costs to the data contributors are minimised and that ease of use for consumers of the CT data can be achieved.”
In an effort to support this, Bondtape has issued a taxonomy to illustrate where different components fit into the CT.
The structure begins with connectivity channels, all of which have different levels of latency, cost and security, and network protocol, the agreed handling of electronic signals on the connectivity channel and a framework for dealing with errors.
In the former category, fiber optic cables and public internet may be used. Network protocols could include transmission control protocol/internet protocol (TCP/IP), a popular service that ensures both the sender and receiver know that their signals have been received, and multicast or real-time transport/user datagram protocol (RTP/UDP). The latter category is what Bondtape calls a “fire and forget” format, which offers a reduced cost but at greater risk of information loss.
The next layer of the framework considers application protocols, which determine how data is exchanged. These include general public protocols like HTTP(S) and gRPC, financial services-specific formats like FIX, and custom or proprietary solutions.
There has been much discussion on data formats for the CT, with the use of JSON opposed by many during ESMA’s consultation on the tape. Alternatives could include the comma separated values (CSV) structure or proprietary data structuring mechanisms.
The final layers of the taxonomy consist of the structure of the message itself: the interface and data standards. Swift’s ISO20022 is a popular option worldwide, however FIX protocols and customised APIs are also potential formats to be adopted.
With this taxonomy in place, Bondtape aims to ensure that the bond CT is able to achieve its intended goals. Ryan concluded: “We’ve engaged with numerous trade associations to develop this simple model and would welcome debate, discussion and improvements to the taxonomy we’ve developed.”
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