Over Half of US Equity Volume Now Trades Off Exchange — and Nobody Pays for the Price

More than half of US equity volume executed off exchange for the first time in 2025, and Europe's lit continuous trading has fallen from 54 per cent of turnover in 2022 to under 45 per cent in 2025 on ESMA's own measure — barely 37 per cent on independent estimates. Those figures anchor an opinion piece by Mark Schaedel, CEO of market-data consultancy DataBP, published after October's World Financial Information Conference in Copenhagen and the Fixed Income Leaders Summit. His argument: the industry is debating who pays for the tape while ignoring who pays for the price itself.

What is the actual free-rider problem?

Schaedel starts from first principles. A displayed, executable quote is a public commitment to trade, exposed to adverse selection from the moment it appears. Somebody must be willing to be wrong in public for a price to exist at all. Investors and market makers supply that commitment; venues provide the regulated plumbing. Consolidated tapes — and oracles (decentralised price-feed networks such as Pyth, which plastered Copenhagen with the slogan "The Price of Everything. Everywhere. No Licence Fees") — merely aggregate the result.

"Neither of them creates a basis point of information," Schaedel writes. "A tape is a mirror, and a mirror with a billboard budget is still a mirror."

Decentralisation, he argues, has broken the old weld between quote and transaction. The quote still carries all its risk, but the liquidity it attracts can execute elsewhere, against a reference that cost the executing venue nothing. The internaliser executes against the public reference without displaying comparable interest. Perpetual-futures venues settle single-stock exposure against oracle prices that "mostly republish the public order book, consumed under an exchange licence written for display screens, run through a model and resold." So-called no-fee pricing, he writes, means "somebody else's licence, repackaged."

The systemic stakes: the NBBO (National Best Bid and Offer, the US consolidated best price) and the fledgling EBBO now contain a shrinking minority of the market, yet best execution is measured against them, retail orders priced off them, funds valued by reference to them, and derivatives, indices and tokenised products settled against them. When LIBOR stopped representing its market, regulators treated it as systemic failure and rebuilt the benchmark. Equity benchmarks are drifting the same way, Schaedel writes, while regulators approve more trading that moves activity away from them.

Where does policy go wrong?

Schaedel identifies three mistakes:

• Pricing data to cost, not value. ESMA's reasonable commercial basis rules make it unlawful to price data by its value to the user; the UK insists fees track cost; new tapes are tendered on price. "Valuing a price by the cost of producing it is like valuing a Rembrandt by the cost of the paint."
• Paying every reported trade the same. A continuous execution, a midpoint match, a negotiated block and a benchmark print convey different information; a tape that pays identically is buying volume, not information. The US ran this experiment twice under Regulation NMS (the 2005 US market-structure rulebook); the lesson — reward the behaviour the market needs, and anything cheap to manufacture will be manufactured by Tuesday.
• Confusing consolidation cost with information value. The UK bond tape tender saw its price cap bid from £1,209 down to 68 pence before landing in court. "For roughly the cost of a chocolate bar, the UK bought itself a bond tape," he writes.

What is the proposed remedy?

A two-tier pricing model. Tier one is public access — retail, display users, researchers, the press — priced low enough for intermediaries to offset, with the 15-minute delayed feed consigned to "a museum." Tier two is commercial dependence: index providers, internalisers, systematic internalisers, derivatives venues, tokenisation platforms and reselling oracles. "Could any of them exist without the price-forming market? No. Does any one of them contribute a quote to it? Also no."

That tier would pay licence fees scaled to assets benchmarked, notional executed against the reference, or notional settled — quantities already measured for other purposes. Proceeds would fund the public tier and flow back to price-forming contributors through tape allocations that distinguish a price-forming execution from a referencing print. The Market Model Typology, already mandated for post-trade flagging in the EU and UK, supplies the vocabulary. The FCA's CP26/31 consultation already requires the UK equity tape to share income with contributors; the division-of-income consultation this autumn is where Schaedel says the distinction must be made explicit.

He closes with the music industry's precedent: it survived digitisation by metering use, not by tendering the royalty rate to 68 pence. Benchmarks drift before they fail — LIBOR drifted for years before anyone acted. Every consultation that closes without asking who pays for the price, Schaedel writes, is a year the market will not get back.