Distinguishing between investment grade (IG) and high-yield (HY) corporate bonds was labelled a key component to tap into greater transparency in more liquid bonds.
A new report from EFAMA estimates that roughly 40% of daily FX flows – representing between $50-70 billion - will no longer be able to settle through the CLS platform, resulting in increased risks.
In a joint statement, the negative impacts the proposal would have on EU capital markets including introducing fragmentation, loss of netting benefits and reducing the EU’s resiliency to market stresses, are highlighted by the associations.
AFME, EFAMA and BVI have urged co-legislators to take an evidence-based, addressing industry concerns appropriately, even if this results in a longer time to complete the negotiations.
In a joint industry letter published by the European Fund and Asset Management Association, asset managers including JP Morgan AM, UBS and Vanguard, emphasise the importance of pre-trade data with fair prices for a consolidated tape.
EFAMA stated that the proposal leaves various key questions open around the methodology for determining the clearing thresholds and the level at which they would apply to various counterparties.
The funds association thinks the move will improve best execution, but warns that “the devil will be in the detail”.
While acknowledging potential benefits of the European Commission’s latest proposals, the associations noted that the changes could make EU firms less competitive and have a negative impact on the derivatives market.
Cboe, AFME, EFAMA and BVI have drafted their position on how they think a consolidated tape should be implemented in Europe; the German finance ministry is reportedly leading the opposition.
Asset manager members have written to politicians criticising current plans for the winning equities tape bidder to be the one that offers the highest returns to regulated markets.