The Financial Conduct Authority intends to make a broader set of share-trading records public for companies listed in London, the regulator has told market participants. The move is designed to address what it regards as a substantial under-reporting of liquidity that, in its view, has contributed to some issuers preferring listings in the United States.
Officials are exploring the collection and publication of transaction data from all trading venues - including stock exchanges, dark pools and various off-exchange platforms - to provide a more complete account of trading activity in UK equities. The proposal reflects a concern that existing liquidity measures give a narrowed view because they lean heavily on data drawn from the central limit order book maintained by the London Stock Exchange.
Simon Walls, the FCA's interim director of markets, said the regulator believes the prevailing liquidity metrics are misleading. He pointed to the exclusion of many trading events - such as periodic auctions and trades executed on opaque venues - from the standard central order book statistics.
As an illustration, the FCA estimates that between January and September of last year roughly 270 million UK share transactions were visible in central order book records. But the regulator's view is that the total level of trading over the same period appears to be about four times higher when trades outside the central limit order book are taken into account.
To address the gap, the FCA is consulting on establishing a consolidated tape - a single data stream that would combine all UK share trading data. That project is expected to be completed next year. In the meantime, the regulator is in discussions with market participants about publishing aggregated trading figures to narrow the reporting shortfall, Walls said.
The timing of the move comes amid UK efforts to revive capital markets after an extended lull in initial public offerings and several notable listings shifting overseas. Market participants have frequently cited weaker liquidity in London compared with US venues as a factor discouraging domestic listings - a perception the FCA contests.
The London Stock Exchange has acknowledged that prospective issuers often raise concerns about liquidity. The exchange has circulated analysis indicating that trading depth in UK equities is comparable with major US indices, according to market accounts.
Alongside the data initiative, the FCA has introduced reforms intended to bolster market activity. These include easing prospectus requirements for secondary share sales. The regulator is also weighing further measures, such as relaxing restrictions on payment for order flow and trimming reporting obligations for some over-the-counter trades.
Contextual note - The regulator's plan centers on improving the visibility of trading activity across venues so that liquidity assessments reflect the full breadth of current market practice rather than a subset captured by the central order book.