Two European trade bodies have drawn up a code of conduct, which they say will help fund managers more accurately find market liquidity.
The Association for Financial Markets in Europe (AFME) and the Investment Association released a statement today saying they are working with trading platforms and that Bloomberg has already agreed to honour the new code.
Under the new code, a distinction will be made between two types of ‘indications of interest’ – which are used by brokers to express their willingness to trade at a given price.
Those that can be settled immediately without market impact will be labelled as ‘client natural’ and those that may involve information leakage and market impact will be labelled as ‘potential’. According to the media statement, Bloomberg has agreed to adopt the categorisation.
Daniel Godfrey, chief executive of the Investment Association, said: “The investment industry is taking a lead on improving the efficiency of equity capital markets.
“Our framework will limit potentially misleading market noise, allow investment managers to see where the real liquidity is and obtain the best price to the benefit of their clients.”
Simon Lewis, chief executive of AFME, added that the consensus between fund managers and brokers was ‘encouraging’.