| The UK's Financial Services Authority (FSA) has issued a Discussion Paper to inform the development of their policy on trading transparency in the UK secondary bond markets. The FSA is keen to investigate the current state of the UK bond markets to assess if there is any market failure and examine the potential to improve trading through greater pre- or post-trade price information.
The paper has been published to encourage debate amongst market participants and enable the FSA to formulate its position in advance of the European Commission's consideration of the issue early in 2006. Of particular concern is the question of whether the proposed rules for the Markets in Financial Instruments Directive (MiFID) need to be revised to include transparency in bond markets.
Currently scheduled for April 2007, MiFID will introduce a comprehensive pan-European Union transparency regime for the trading of shares on EU regulated markets. Whilst initially this will apply only to shares, the European Commission is required by Article 65 of the Directive to consider whether requirements should also cover other asset classes, including bonds.
Commenting on the paper, Hector Sants, FSA Managing Director for Wholesale Business, said: "We are mindful of the importance of the bond markets to the UK, for investors, issuers and as a leading trading centre, and a key objective in undertaking this work is to ensure that the UK contributes constructively to the Commission's review of whether the scope of the MiFID transparency regime ought to be extended to the bond markets."
The Discussion Paper (DP05/5), "Trading transparency in the UK secondary bond markets" is available from the FSA's website.
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