19 Dec 2014

FME comments on likely impact on fixed income markets of ESMA’s MiFID II consultation proposals

Commenting on the consultation launched today by the European Securities and Markets Authority (ESMA) regarding the implementation of the Markets in Financial Instruments Directive (MiFID II) and Regulation (MiFIR), Christian Krohn, Managing Director at the Association for Financial Markets in Europe (AFME), said:

“ESMA's proposals in this consultation raise numerous issues - one being the likely impact on fixed income markets. We are concerned the proposals could impact these markets’ liquidity, increase investor costs and make issuance of debt more expensive, and we hope to continue to engage with policymakers to ensure MiFID II will not be an obstacle to the growth agenda of the European Commission.”

“For example, ESMA proposes to define a large number of instruments as liquid, although the majority of fixed income instruments trade highly infrequently, and it is a key component of ESMA’s mandate to assess liquidity.

“While we support the introduction of transparency requirements, these need to be carefully tailored to the specifics of those markets to avoid disruption and broader impacts on investors and issuers.”