Stand well back…this may explode!!
So, where does the CT fit in the EU’s strategic policy narrative and why is it so important for the market as a whole?
Towards Draghi’s Vision: A Union That Delivers
In his 2024 report on the future of EU competitiveness, Mario Draghi underscored the importance of fully integrated capital markets as a strategic pillar of the Union’s economic strength. This message built on European Commission’s Capital Markets Union (CMU) Action Plan in 2020 and the currently emerging Savings and Investment Union (SIU). Draghi further argued that fragmented financial markets hamper the efficient allocation of capital, innovation, and resilience. Consolidating post-trade data across the EU’s capital markets — particularly in less transparent markets like bonds — is a core part of delivering that integration.
The CT directly supports this ambition: it’s an infrastructural response to information fragmentation, enabling both institutional and retail investors to make better-informed decisions.
A Policy Lever in the CMU and SIU Framework
Without a CT, investors, regulators, and issuers operate in an inconsistent, fragmented environment; characterised by higher cost solutions offered by a handful of vendors only.
The CT addresses this by providing a single, standardised, and validated view of post-trade transactions across EU venues. This enables better price formation, cross-border participation, and transparency — especially critical for smaller firms and investors priced out of today’s fragmented, high-cost data landscape.
Addressing these accessibility and efficiency challenges is a central theme of the EU’s policy vision.
Commercial Disruption: From Data Rent-seeking to Market Efficiency
No one should underestimate the impact of this potent combination of high quality, comprehensive and real-time data offered at a fraction of the cost of existing services.
Fundamentally, by lowering barriers to entry and reducing data silos, the CT supports a more competitive and innovative capital market ecosystem. The vast majority of market participants (particularly smaller asset managers, pension funds, regional banks etc), will benefit from greatly improved access to high quality, actionable market information.
Moreover, if Europe develops along the same trajectory as the US (with TRACE data), it is widely anticipated that many new, value add solutions, entirely predicated upon the existence of the CT, will enter the fixed income space.
Overall, the democratisation of data may enable the EU’s bond markets to finally overcome a range of shortcomings in terms of liquidity, barriers to entry, instrument fungibility and correlations, as well as of course transparency on price formation and trading activity.
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