More trading in bond market transparency is unnecessary, says the FSA
Competition, market-driven transparency, regulation and the interaction between the cash and credit derivatives market is enough for efficient pricing and fair execution, according to a discussion paper on the UK secondary bonds markets released today by the Financial Services Authority (FSA) in the UK.
“We do not see any evidence of substantial market failures related to transparency in wholesale bond markets,” said the regulators, who advised that extreme caution should be exercised when mandating greater transparency in the UK and Europe. “We agree with many respondents…that mandating pre-trade transparency is likely to impact on the existing complex market structures in potentially significant but unknown ways,” they added.
The FSA said effective implementation of the Markets in Financial Instruments Directive (Mifid) will address many transparency concerns. “We will continue this discussion in the next few months ahead of our consultation paper in October on the implementation of Mifid’s conduct of business provisions,” the FSA concluded.
Click here to see the paper in full.
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