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European Financial Services Industry Standard of Good Practice on Bond Market Transparency for Retail Investors
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There is a consensus in the European financial services industry that competition ensures that the appropriate level of pre- and post-trade price transparency is already available to wholesale participants in the bond markets but that retail investors may benefit form easier access to price transparency.
ICMA has therefore developed a voluntary European Financial Services Industry Standard for Good Practice on Bond Market Transparency for retail investors to provide easier access to price transparency to retail investors by improving the quantity and accessibility of price and liquidity information available to retail investors about liquid and highly rated bonds.
The standard was reviewed in January 2009.
For more information about the standard please contact ICMA's Regulatory Policy team.
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To read more about the bond market transparency website click on either the pdf guide listed below or the website link.
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To access the new transparency website called BondMarketPrices.com click here.
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EU Commission’s Public Hearing on MiFID-non-equities market transparency
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ICMA's presentation to the EU Commission’s Public Hearing on MiFID-non-equities market transparency on 11 September 2007 in Brussels is available from the link below.
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Assessment of Responses to ICMA Bond Market Transparency Questionnaire
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Under Article 65 of MiFID, the European Commission is required to report about whether to propose that the regulation of market transparency for equities under MiFID should be extended to bonds.
In our response to the Commission's call for evidence on bond market transparency, we argued that there is no market failure in the European bond markets and therefore no case for regulatory intervention, but that we should consult our members about a market-led alternative. In April we initiated this consultation process by issuing a questionnaire to members on ICMA proposals on bond market transparency Our assessment of the responses to the questionnaire can be found in the document below.
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ICMA response to the Commission's call for evidence
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ICMA response to the Commission’s Call for Evidence:
Pre- and post-trade transparency provisions of the MiFID in relation to transactions in classes of financial instruments other than shares, may be downloaded from the link below.
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Debt Markets in Europe: transparency, liquidity, efficiency
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‘European Corporate Bond Markets: transparency, liquidity, efficiency’
‘European Government Bond Markets: transparency, liquidity, efficiency’.
These two independent academic studies were commissioned from the Centre for Economic Policy Research jointly by a number of trade associations including ICMA. Professor Bruno Biais of the University of Toulouse led the research on corporate bond markets. Professor Richard Portes of the London Business School led the research on government bond markets.
Both studies present original analysis of previously under-researched markets. They provide substantial new evidence to policy-makers and industry in advance of the European Commission’s review of bond market transparency,. The Commission’s review, required by MiFID (The Markets in Financial Instruments Directive), is due to be completed by November 2007.
The research is also relevant to the implementation of the best execution rules in MiFID. The FSA’s recent discussion paper on best execution, for example discusses the use of benchmarks such as price and trade information in the context of dealer markets.
The Biais study concludes that imposing pre-trade transparency via regulation would be risky, as it would require significant changes to the microstructure of the market, and that greater post-trade transparency would benefit some market participants but should be designed and implemented carefully and be market-led if possible. The Portes study concludes that the regulatory imposition of greater transparency could adversely affect liquidity in the government bond markets.
ICMA will be discussing how to respond both to the Commission’s review of transparency and to the FSA’s paper in its member committees. Please contact the Regulatory Policy team at ICMA now if you would like to be involved in this work.
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To view the accompanying press release click here
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Presentations by the reports' authors may be downloaded from the links below.
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European High Yield Bond Markets: transparency, liquidity, efficiency
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An further independent study on the high yield corporate bond markets in Europe, “ European High Yield Bond markets: transparency, liquidity, efficiency” was published in March 2007. This study complements the two other studies on the corporate and government bond markets in Europe, “European Corporate Bond Markets: transparency, liquidity, efficiency” and “European Government Bond Markets: transparency, liquidity, efficiency”, published by the same associations in May 2006. It is the first empirical study into European high yield bond markets.
Recognising that high yield corporate bond markets play an important role in the financial system, the study was designed to investigate the extent to which the secondary market operates efficiently and transparently and meets the needs of different market participants, including investors. The research was commissioned to inform the associations’ input into the European Commission’s review of non-equity market transparency, required by MiFID (Markets in Financial Instruments Directive) and due to be completed first quarter 2008.
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