EC To Examine Transparency In Non-Equity Markets

by Ulrika Lomas, for LawAndTax-News.com, Brussels

14 June 2006

The European Commission on Monday launched a call for evidence on transparency in the bond markets and other non-equity markets. The call for evidence relates to a report that the Council of Ministers and the European Parliament have asked the Commission to make by the end of October 2007.

It will investigate whether and to what extent new requirements on pre- and post-trade transparency should be introduced at EU level to trading in financial instruments such as bonds and other non-equities.

Internal Market and Services Commissioner Charlie McCreevy explained that:

"MiFID requires us to investigate whether it would be appropriate to impose any pre- and post-trade transparency provisions on markets in financial instruments other than shares. I have a completely open mind at this stage. These are massively important markets – so the Commission is carrying out scrupulous, fundamental research. I hope there will be a wide response from all parts of the EU."

The call for evidence states that in conducting the review, the Commission intends to prioritise cash bond markets (government, investment grade and high-yield), as well as related derivatives markets and other important markets such as those for asset-backed securities. It asks for views on whether the right prioritisation has been proposed for the review.

It goes on to ask a series of questions focusing on whether there are demonstrable problems in any of these markets that mandatory transparency might be able to solve; if so, whether EU-level action would be indicated; and what policy options, if any, the Commission should consider in framing any response.

After discussions with all interested parties, including practitioners, the Commission will draw up a draft report. The draft report will be subject to a public consultation and discussed at a hearing in Brussels ahead of the finalisation of the report in the autumn of next year.

All interested stakeholders, including industry and individuals, are encouraged to reply to the call for evidence. The closing date for submissions is 15 September 2006.

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