The 68p lawsuit that threatened to upend the British bond market

In 2023, the Financial Conduct Authority (FCA) aimed to modernize the British bond market by introducing a consolidated tape (CT) – a system to collate trade data for increased accessibility and transparency. The FCA planned to outsource this CT via a procurement contract using a reverse auction. However, the auction quickly devolved, with bids plummeting to just 68p. Ediphy, a bidding firm, alleges its bid wasn’t properly recorded and that the process was “demonstrably and fatally flawed and unfair,” launching a lawsuit against the FCA.

Ediphy also raised concerns about a potential conflict of interest, as Etrading’s chief product officer later joined the FCA board. The lawsuit automatically froze the contract award, potentially delaying the CT’s implementation. The FCA defended the process, stating it was fair and competitive, and petitioned the court to lift the freeze.

Ultimately, Ediphy agreed to lift the suspension to avoid further delays, now pursuing only damages, allowing Etrading to proceed with the contract. However, the incident serves as a cautionary tale for the FCA as it moves forward with a similar consolidated tape initiative for the equity market, highlighting the need for a robust and transparent procurement process to avoid future legal challenges.

(Source：City A.m.)