MarketAxess Survey Reveals - Market Participants Voice Growing Support for Greater Transparency in European Fixed Income

London - 9 July 2015

72% of European capital market participants believe that there is not sufficient transparency in the European fixed income markets today, according to a survey of approximately 200 senior buy- and sell-side market participants conducted at the MarketAxess and Trax European Capital Markets Forum. Support for increased post-trade transparency is up sharply compared to last year’s forum, where just over half believed further transparency was needed.

While 56% of respondents at the forum believe pre-trade transparency under MiFID II will harm European fixed income markets, 55% saw the post-trade transparency requirements envisaged under the regulation as beneficial.

MiFID II delay continues to affect market preparation

Nearly three quarters (73%) of participants are currently putting their preparations for MiFID II on hold while finalisation of the level-2 text remains pending. Half of participants also admitted that the delay to MiFID II has affected their preparations.

Importance of trading technology continues to grow

The overwhelming majority (90%) of participants expect the number of counterparties they trade with electronically to increase over the coming 12 months. Furthermore, efficient trading technology is seen as the most important attribute in achieving best execution, with strong dealer relationships and robust market data following as top contributors to achieving best execution.

Capital Markets Union to play important role in stimulating Europe’s corporate bond market

65% of market participants believe that the proposed Capital Markets Union (CMU) will play an important role in growing and deepening Europe’s corporate bond market. Only a small minority (8%) disagreed with the potential importance of the CMU initiative.

Commenting on the results, Scott Eaton, Chief Operating Officer, MarketAxess Europe and Trax, said: “The results of our annual European Capital Markets Forum survey show that there is still significant concern about the impact that pre-trade transparency proposals set out under MiFID II/MiFIR will have on fixed income market liquidity. However, it is clear that there is a growing consensus for further, well-calibrated fixed income post-trade transparency in Europe. We remain an active participant in dialogues with industry working groups and regulators to explore proposals which benefit the wider institutional market and ultimately end-investors.”  

Additional key findings include:

  • 74% of respondents indicated that they currently do not have a Transaction Cost Analysis (TCA) tool but are planning on implementing a solution in the near future
  • If a definitive instrument list is not made available by ESMA, a significant majority (77%) stated they would build-out or buy a reference data solution, in order to satisfy instrument eligibility for transaction reporting.
  • Participants were split on their confidence to meet the CSDR mandated settlement rate of 99.5%, with 56% either somewhat or very confident and 39% not confident at all.

The annual European Capital Markets Forum, jointly hosted by MarketAxess and Trax, took place at the Andaz Hotel, Liverpool Street, London on Thursday 18 June 2015.

The keynote speech at the conference was given by The Rt Hon Mark Field MP Cities of London and Westminster. Panel sessions addressed the most pressing challenges being faced by the European capital markets: regulation and changes to market structure; transparency and its effects on liquidity; implications of CSDR; trade reporting under MiFID II/MiFIR and the market impact of MiFID II/MiFIR on trade execution.  The event concluded with an armchair discussion between Rick McVey, Chairman and CEO of MarketAxess Holdings Inc., and James Davis, Partner in Corporate and Institutional Banking at Oliver Wyman.

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