MiFID II has fallen short on transparency and will potentially create tiered access to market information, says Juan Landazabal, global head of fixed income and FX trading at Deutsche Asset Management.
Speaking at AFME’s European Trading & Market Liquidity Conference, he said, “I don’t think there is any more transparency in the market today than there was in November last year so I think from that perspective the regulation has failed.”
He added that the lack of a consolidated tape meant that aggregation of data was a cost issue, which did not favour smaller firms.
“Furthermore, because the landscape is so complex and there is no single tape, the market has evolved into different levels of playing field,” he said. “Those with more resource and technology will be able to data mine transparency reports to their advantage which I think goes against the spirit [of the rules].”
His sentiments were supported by Christoph Hock, head of Multi-Asset Trading, at Union Investment, who said, “The quality of data from our perspective is poor, so you have very few bonds determined as liquid, so the deferral regime, when it comes in for post-trade transparency, will not add much to the data we get from MiFID II.”
The case for the European Securities and Markets Authority running a consolidated tape had merit added Ashlin Kohler, fixed income market structure at Citi, but within limits.
“I think it is a good idea,” she said. “There are a lot of products there for them to look at and they may be more successful with some than others. I would say it could be a goer for bonds, for but derivatives it would be a different story. They don’t have the right knowledge and skill internally to drive the way that data should look. They could buy it in, but it would be challenging for experts.”