Industry nervy as Esma faces Mifid liquidity challenge

They are questions that should strike fear into the heart of any regulator: how often does a product have to trade, and in what volumes, before it can be deemed liquid? The European Securities and Markets Authority has months to find an answer, and traders are worrying about the outcome. Tom Osborn reports

george-handjinicolaou
George Handjinicolaou, Isda

Defining liquidity is not easy, but it's a task the European Securities and Markets Authority (Esma) has a matter of months to complete, as it lays out the boundaries of a new trading and transparency regime for over-the-counter derivatives. There is only one certainty at this point – Esma's decisions about what is liquid and what is not will slice up the OTC market in Europe, subjecting products and venues to very different pre- and post-trade disclosure requirements.

A May 22 discussion paper

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