A group of leading investment banks announced a plan to pool trade transparency information across Europe to create a trade data and market data dissemination platform.

The members of the consortium are: ABN AMRO Bank N.V., Citigroup Inc., Credit Suisse Group, Deutsche Bank AG, Goldman Sachs Group, Inc., HSBC Group, Merrill Lynch & Co. Inc., Morgan Stanley and UBS AG. The firms said that the platform is expected to yield significant cost benefits with respect to both trade reporting and market data dissemination.

“This move is a response to the opportunities created by the European Union’s Markets in Financial Instruments Directive which is expected to come into force on Nov. 1, 2007 to create a more transparent and competitive landscape in financial markets,” they say.

Currently, in a number of markets in Europe, including Britain., market participants are required to report trades conducted over-the-counter to exchanges that charge a fee to receive this information and then generate market data revenues from selling this information. In other markets, such as Germany, there is no requirement to report OTC trades and thus knowledge of these trades is not made available to the market.

To improve post-trade transparency, MiFID introduces consistent OTC reporting rules across EU markets such that all OTC trades must be reported. It also allows non-exchange entities to receive, process and disseminate trade reporting information, creating competition with exchanges in trade reporting and market data.

In response, the consortium plans to create a single pre- and post-trade reporting and market data platform on a pan-European basis. This platform is expected to improve transparency and yield significant cost benefits as a result of the economies of scale it will generate and also allow the participants to comply fully with the relevant requirements of MiFID.

The banks say that while MiFID is a catalyst, they have been considering for some time how to improve the cost effectiveness of trade data capture and dissemination. “This initiative will create an optimum platform that has the ability to scale and evolve to meet the needs of the industry and encourage further competition,” they say. “Further benefits will arise as other users are attracted to contribute data on the same terms as the consortium banks. Although the initial focus is on the European equity market, the platform will be developed both to meet potential new regulatory requirements and future market demand. This includes opportunities for expanding across the product range.”

Consortium members will have equal shares in the platform and intend to retain control of the planned entity for the foreseeable future. The consortium intends to complete development and implementation of the first phase of functionality, equity pre-trade quotes and post-trade reporting, ready for parallel operation by participating firms by Aug. 1, 2007.

The consortium says that is in the process of finalizing the appointment of a service provider to supply a new platform. In its first phase, the platform will capture, aggregate, distribute and display pre-trade quotes and post-trade reports for over-the-counter European equity deals. This functionality will enable compliance with MiFID’s transparency requirements. A Request for Proposal was sent to leading service providers in July and a decision is expected to be announced on the chosen provider in October.