New research reveals flaws which undermine UK and EU bond market data integrity

London, Amsterdam and Paris, 19 September, 2024 – New research undertaken collaboratively by FINBOURNE Technology, Adamantia Advisory and Propellant Digital (supported by AFME, BVI and EFAMA) has distilled a number of significant data gaps that might undermine the efficiency and integrity of fixed income markets across the UK and EU, once the planned new post-trade transparency regimes and consolidated tapes come into effect. The research reveals that the reliability of public information on bond transactions is being compromised by a meaningful number of errors, including missing fields and notable inconsistencies.

Despite the critical importance of accurate data in bond markets, the analysis highlights several major issues. One of the most concerning findings is the replication of transaction data. The research indicates that only up to 11% of the 153 million fixed income transaction records analysed were not replicated. These duplications arose from complex processes at certain electronic trading venues, where data collection repeatedly captured both old and new transactions. This has necessitated substantial “de-replication” efforts for parties seeking to carry out detailed analysis of the data, complicating the task of obtaining a clear and accurate picture of market activities.

The research further uncovers significant gaps in essential transaction and reference data fields. Over two-thirds of records in early 2024 were missing crucial currency information, while approximately 25% lacked details on transaction quantities. In addition, there appear to be a number of required fields that are populated using varying interpretations of the appropriate format.  This directly impacts the reliability of financial reports and hinders the decision-making processes for institutional investors. The study also identified differences in categorisation of reference databases that will hamper the ability of market participants to accurately identify and manage their core data needs.

The findings serve as an important wake-up call for debt investors across the EU and UK. Without adequately addressing these fundamental data discrepancies, the anticipated benefits of both revised post-trade transparency regimes as well as anticipated UK and EU Consolidated Tapes for fixed income (initiatives designed to collect and display real-time data on bond trades from multiple sources on a single platform) might be materially undermined.

This detailed and collaborative research highlights the timely need for enhanced data accuracy and integrity to safeguard and improve the future of bond markets. We urge industry stakeholders, regulators and market participants to collaborate to address these data flaws to further promote the stability and efficiency of fixed income markets.

To learn more about our research, read our UK and EU Fixed Income – Data Quality Report.

Thomas McHugh, CEO and Co-Founder of FINBOURNE Technology said: “These findings are a stark reminder of the critical importance of data accuracy in maintaining the integrity of bond markets. The significant number of errors, from replicated transactions to missing crucial information, threatens not only market efficiency but also the confidence of institutional investors. As we move towards the EU Consolidated Tape for fixed income, it’s imperative that industry stakeholders and regulators act swiftly to address these data flaws.”

Antoine Pertriaux, Partner at Adamantia Advisory said: “Data quality remains a major challenge in the fixed income markets. The European Consolidated Tape is more than welcome as it will certainly be an important catalyst in this respect. I believe that the CT, together with collective industry efforts can achieve the desired outcomes in terms of market data reliability and transparency.”

Vincent Grandjean, CEO at Propellant Digital said: “This research provides a comprehensive analysis of the critical role that data quality plays in ensuring transparency and accuracy in fixed income markets. Supported by key industry bodies like AFME, BVI, and EFAMA, this report highlights essential insights and recommendations that can drive substantial improvements in the regulatory landscape.”

Media Contacts:

Laura Morrison

Aspectus Group

finbourne@aspectusgroup.com

About FINBOURNE Technology 

FINBOURNE’s solutions deliver an interconnected network of functionality and data that enables the investment community to better serve clients in a constantly evolving market.

Its investment management solutions and cloud-native data management platform ensure that investment and operations teams can increase revenue, reduce costs, and better manage risk across the investment life cycle.

With operations in North America, the UK and Europe, Asia and Australia, FINBOURNE is trusted by some of the world’s leading financial services firms, including Fidelity International, London Stock Exchange Group, Baillie Gifford and Northern Trust.

For more information on FINBOURNE Technology visit finbourne.com or contact sales@finbourne.com.

About ADAMANTIA

ADAMANTIA is an independent management consulting firm specialized in the financial services and based in Paris.

Our Capital Markets team provides consultancy services to leading financial institutions across all segments of the Capital Markets activities. Our combination of deep industry knowledge, skills and experience enables us to meet our clients’ challenges and drive their business changes successfully, by providing unique and adaptive solutions to their positioning.

More about us: www.adamantia.paris

About Propellant Digital 

Propellant Digital is an award-winning technology company specialising in Fixed Income data analytics. Our founders are trusted specialists in transparency and trading data, passionate about making bond, swap and ETF markets more transparent.

Propellant delivers practical, responsive technology that transforms this data into actionable insights. We help global and regional banks, asset managers, quant hedge funds, trading venues, regulators, and industry associations to analyse transparency and trading data in near real-time. Our unique analytics cloud platform leverages the most extensive Fixed Income dataset, providing users with the insights they need to improve trading strategies, streamline workflows, and make informed trading decisions.

For more information on Propellant Digital visit propellant.digital or contact info@propellant.digital

About AFME 

AFME (Association for Financial Markets in Europe) promotes fair, orderly, and efficient European wholesale capital markets and provides leadership in advancing the interests of all market participants. AFME represents a broad array of European and global participants in the wholesale financial markets. Its members comprise pan-EU and global banks as well as key regional banks, brokers, law firms, investors and other financial market participants.

AFME participates in a global alliance with the Securities Industry and Financial Markets Association (SIFMA) in the US, and the Asia Securities Industry and Financial Markets Association (ASIFMA) through the GFMA (Global Financial Markets Association).  For more information, please visit the AFME website: www.afme.eu

About BVI 

BVI represents the interests of the German fund industry at national and international level. The association promotes sensible regulation of the fund business as well as fair competition vis-à-vis policy makers and regulators.  Asset managers act as trustees in the sole interest of the investor and are subject to strict regulation.  Funds match funding investors and the capital demands of companies and governments, thus fulfilling an important macro-economic function. BVI’s 116 members manage assets of some EUR 4 trillion for retail investors, insurance companies, pension and retirement schemes, banks, churches and foundations.  With a share of 27%, Germany represents the largest fund market in the EU.  BVI’s ID number in the EU Transparency Register is 96816064173-47. For more information, please visit www.bvi.de/en

About EFAMA

EFAMA is the voice of the European investment management industry, which manages over EUR 30 trillion of assets on behalf of its clients in Europe and around the world. We advocate for a regulatory environment that supports our industry’s crucial role in steering capital towards investments for a sustainable future and providing long-term value for investors.

Besides fostering a Capital Markets Union, consumer empowerment and sustainable finance in Europe, we also support open and well-functioning global capital markets and engage with international standard setters and relevant third-country authorities. EFAMA is a primary source of industry statistical data and issues regular publications, including Market Insights and the authoritative EFAMA Fact Book.

More information is available at www.efama.org