Five financial services associations have grouped together to commission an independent research study into European bond markets ahead of consultation with Europe.
The Association of British Insurers (ABI), Corporation of London, Internal Capital Markets Association (ICMA), Investment Management Association (IMA), and London Investment Banking Association (LIBA) have commissioned the research in order to answer a range of questions ahead of consultation on the review of bond market transparency by the Markets in Financial Instruments Directive.
The research will look at whether bond markets deliver efficient market outcomes and, say the group, where the outcomes are not efficient whether this could be improved by either pre or post trade transparency in the bond market. Research may also look at the extent to which market participants are encouraged to develop their own solutions and what can actually be achieved by direct regulatory intervention as well as the extent to which transparency occurs already occurs in the bond markets.
The group say the research will take the form of two independent studies, one concentrating on the corporate bond market, the other sovereign debt.
Richard Saunders, chief executive of the IMA, says lack of transparency in a market is not of itself evidence of market failure adding: “We are interested in having markets that deliver a fair outcome for all users. This may or may not involve additional transparency. If the research shows that there are issues that require change, we would expect the regulators to assess first the potential for a market solution, before proposing intervention.”
Meanwhile, Peter Montagnon, director of investment affairs at the ABI says “Any decision about transparency needs to be made on the basis of full understanding so that the markets work in the interest of all their users. As investors, we are therefore happy to work with the sell-side, and other participants in commissioning this research.”
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