After slow start, the ‘Big 3’ fixed-income consortium taps Finbourne as partner for CT bid

A consortium led by the top three fixed-income venues by trade volume—Bloomberg, MarketAxess, and Tradeweb—has selected Finbourne as its technology partner in its bid for the EU consolidated tape (CT) for bonds, a process that sources say was met with setbacks and delays.

The provider of investment management data services won out against competing vendors Ediphy and Opensee in a request-for-proposal (RFP), but three sources familiar with the build out tell WatersTechnology that the selection process faced delays at the tail end of last year. One market structure source at a bank says that following its confirmation for the CT bid in June of last year, the venues hired consultancy firm Quorsus to help them nominate a vendor by September or October of 2022.

“[Quorsus] was hired to bring the consortium together and select the technology provider,” the market structure source adds.

However, three sources say the consortium and Quorsus collectively struggled to agree on how to take the project forward.

“I’ve got a lot of sympathy for anyone trying to do that. It’s not an easy thing to do, especially when the firms that are looking to collaborate, like the three venues, don’t have the experience and the history of collaboration. They’re learning as well, and therefore the advisory firm has an even harder task,” says Sassan Danesh, CEO of Etrading Software, a firm that will also vie to become the regulatory-backed CT provider in Europe.

Toward the end of last year, the venue-led consortium switched out Quorsus and began working with OpCo LLC, a US-based consultancy.

“[OpCo] has experience in capital markets but also experience in consortium building,” the market structure source says. “The consortium selected this new company and the company put in somebody who is UK-based to help them.”

In a joint statement to WatersTechnology, the venue-led consortium said that the two expert advisory firms were used in different phases of the project.

“Quorsus successfully helped us shape our vision of a reliable, efficient, and cost-effective CT initiative, and ran the RFP process to select a technology vendor, which has now concluded. As we shift focus to the European Securities and Markets Authority (Esma) CTP selection and authorization process, OpCo’s consortium-focused skillset will prove invaluable,” the consortium stated.

OpCo declined to comment for this story. Quorsus did not respond to requests for comment. Finbourne declined to comment beyond its announcement.

Where to?

In June 2022, the three venues, which also run approved publication arrangements (APAs), confirmed their plans to compete for the consolidated tape as a consortium. WatersTechnology first broke the news of the consortium’s intentions in November 2021.

As part of their initiative, they announced their intentions to establish an independent company that would operate separately from their core multilateral trading facility (MTF) businesses and aimed to outsource the running of the tape to a tech vendor.

Now that Finbourne has been announced as the tech partner, sources are curious as to what a consortium-led CT will look like, what the business model will be, and how will its governance structure will work.

Several sources say it’s still unclear as to how these three parties—the consortium, Finbourne and OpCo—will work together. The market structure source says the three venues will need to decide how the tape is governed and could look to outsource those senior management and sales functions to OpCo. Other areas that need to be addressed include who would be responsible for the data cleansing: does this responsibility solely sit with the APAs or will Finbourne also be responsible for validating the data? It is still unclear which party will do what.

One senior executive at a trading firm told WatersTechnology back in November 2022 that the venues were seeking a partner that would fulfill more than just the tech role.

As Bloomberg, MarketAxess, and Tradeweb are rival fixed-income venues, they will need to outsource much of the running of the tape and commercial duties to an independent company to avoid conflicts of interest.

“The consortium is not just looking to outsource the technology, but the operational side of things as well. So, it’s more than just tech provisioning,” the senior executive added. “If you think about three companies like that working together, you must think, ‘How are they going to staff the operational side of things?’ It’s going to be very difficult.”

Additional reporting by Theo Normanton, Eliot Raman Jones, and Max Bowie.