As the implementation of the Financial Conduct Authority’s (FCA) UK bond and derivatives transparency regime – set for 1 December 2025 – looms, panellists at FILS discussed both the benefits and challenges presented by the market shift.
Upcoming transparency changes in the UK and the EU will undoubtedly reshape fixed income trading and data usage, and as these regimes quickly begin to become a reality, conversations are shifting towards how the industry can harness these to unlock the best market outcomes.
Following the shift, the market expects the introduction of new datasets, which are set to enhance execution quality and counterparty assessments.
As one panellist commented: “The transparency regime will be an undercurrent of change that will reshape how we think about bond trading. It will help us understand the data better, appreciate the information value in that, and start to influence our execution, decision making, how we hedge transactions and liquidity provision.
“Simplistically speaking, it’s about the market impact each data print will have or not have.”
Expanding on this, panellists were quick to emphasise the importance of preparing and ensuring the industry is properly informed of the upcoming change.
As one expert iterated: “We have to get the balance right between unburdening the industry, which is our main goal, and at the same time ensuring we have the data so we can fulfil the market remit as well.”
Read more – A triangle of transparency
Possible hurdles in the road underlined in discussions included the likelihood of deferrals limiting real-time transparency, however the key pain point panellists urged the industry to be aware of revolved around the impact on liquidity.
“What we have to watch out for clearly is where we have seen with TRACE where there has been impact on liquidity and where that might be,” the speakers emphasised.
“Whether that relates to LatAm corporate bond liquidity or in the block size liquidity for corporate bonds, that’s the flip side. So, there are going to be positives and it’s about how you use that data set in addition to the other data sets you currently use. It’s just watching out for the market impact that’s associated with it.”
All roads lead to the consolidated tape
With developments around the fixed income consolidated tapes (CT) in the UK and EU making the tapes a hot topic in the industry, discussions at the conference were no exception.
Specifically, conversations turned towards how the transparency regimes and the tapes will coincide, with a key point surrounding uncertainty about the timing gap between the launch of the regime and the tapes’ arrival in both the UK and the EU.
To navigate this, panellists emphasised the need for firms to begin using the data, however noted the difficulties a lag in the tape’s implementation may pose for the industry.
“It depends on the time difference between the regime coming in in December and the launch of the tape proposals. We’re expecting March next year so, but the tape’s not going to be there for at least a few months or maybe longer.”
Read more – Getting the show on the road
As the data transparency ecosystem begins to evolve and change, with the upcoming regimes and bond CTs, the industry landscape is set to be one to watch over the coming months.