Bonds trading needs clarity


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Bonds trading needs clarity - By Päivi Munter - April 29, 2005

Transparency in trading of European Union government bonds has reached an established level, is improving in corporate paper but lags in the retail fixed-income market, a study found yesterday.

But the study, published by the Bond Market Association (BMA), acknowledged that transparency in bonds still lagged behind that of exchanged-traded equities.

Most trades occur in the traditionally opaque over-the-counter market, but the number of exchange-traded transactions is rising, boosting transparency on liquidity and prices. Electronic trading decreases the cost of trading bonds, cutting the need for manual work.

The bulk of the trading volume in European bonds consists of transactions between financial institutions, although the number of retail trades is greater and their share of the total turnover is increasing.

Peter Knez, global head of fixed income at Barclays Global Investors, said that although intraday price data for a large part of the European corporate bond market was becoming available, transparency in fixed-income continued to trail equities.

"The sort of data that were available for equities 10 years ago is now becoming available for [European] corporate bonds," Mr Knez said.

The BMA's study precedes European Commission deliberations on whether to expand transparency provisions in the Market in Financial Instruments Directive to other types of financial instruments, such as bonds.

Bonds are an increasingly common investment in the retail market, and there have been notable losses for private individuals, such as the bankruptcy of Parmalat, the Italian dairy company, in December 2003 on large-scale financial fraud.

il report studio

published: 4.28.05
Bond Market Association Releases New Study on European Bond Pricing Sources; Assesses Implications for Greater Transparency in the EU Bond Markets
Date: April 28, 2005
Contact: Byron Ousey, Candace Carpenter, Gavin Anderson & Co. +44.020.7554.1400

London - The Bond Market Association (BMA) and the European Primary Dealers Association (EPDA), a division of the BMA, published a new study on European government and corporate bond pricing sources, which reviews and assesses the level of price transparency available through electronic trading platforms and data vendor operations in Europe. The study concludes that there is well-established pre- and post-trade transparency in the EU government and, increasingly, corporate bond markets for institutional investors; however price transparency is much more limited for retail investors.

The European Commission will be evaluating whether the Market in Financial Instruments Directive (MiFID) price transparency provisions for equities should be applied to other types of financial instruments such as bonds. The BMA and the EPDA believe that before policy is formulated, regulators and market participants should closely examine the transparency of existing trade execution mechanisms and bond price data dissemination networks in Europe and the effect of transparency on liquidity.

"The intent of the study is to provide a benchmark for market participants and regulators regarding the current state of price transparency in the EU bond market, who has access to it, how quickly and at what cost," said Bertrand Huet-Delaherse, Executive Director and European Legal and Regulatory Counsel at the BMA.

The BMA has long supported price transparency for retail investors in the U.S. bond markets, where post-trade price transparency has been mandated by U.S. regulators in certain debt securities. Its retail oriented website, , offers users free real-time price data for all U.S. municipal, corporate and government bond trades.

On the basis of its findings, the study invites market participants and policy makers to consider a list of issues that will ensure adequate formulation of any future policy and continued growth of the EU bond market. These include questions on the underlying rationale for mandating pre- and post-trade transparency and on the scope of any regulatory intervention, both in terms of bond sectors and types of investors.

"It is critical that the EU bond industry and its regulators have an open dialogue on this topic, which we hope this study will help guide," said Huet-Delaherse.

For a copy of the BMA study, please go to .

The BMA, the International Securities Market Association (ISMA) and the International Primary Market Association (IPMA) last week announced that they plan to integrate their European based activities into the International Capital Market Association (ICMA) and establish a global partnership between the BMA and ICMA in order to provide a unified voice for the capital markets industry. ICMA, which will be European based with offices in London and Zurich, will also include the EPDA and the European Securitisation Forum, an affiliate of the BMA. All the organisations are expected to receive final approval for the integration from their respective memberships by mid June 2005.
Spero che abbia un senso il thread.. :(