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Bonds Liquidity Transparency: EU Marketplace Slowly Moving in the Right Direction

By 14 May, 2018November 18th, 2019Buyside Trends, Insights, Sellside Trends
The European Securities and Markets Authority’s (ESMA) May 2 announcement that 220 of the 71,000 corporate credit and government bonds traded in the EU during Q1 2018 were deemed liquid came as little surprise to any of the market’s participants, globally. In 2018, the reasons underpinning illiquidity in the bulk of the bloc’s approximately EUR 7tn-in-size OTC and exchange-traded marketplace for both varieties of paper are well understood.
What still remains unclear, however, is what steps bond markets participants intend to take in the mid- to long-term to address the structural, ‘new normal’ inefficiencies of the post-financial crisis dynamics of secondary markets trading, especially within the corporate credit landscape and especially within the EU. Moreover, with MiFID II now live in the EU, what does ESMA intend to do over the mid- to long-term period to address those inefficiencies?
In this article, GreySpark Partners Analyst Consultant Rihards Buliga examines the potential for structural changes in the future EU bond trading space through the lens of the as-yet undecided form of MiFID II’s proposed consolidated tape for European corporate bonds.

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