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Foreign Exchange

Traders shrug off Mifid II impact on transparency and liquidity

Objective to increase transparency has largely failed but liquidity remains resilient, say senior traders.

Three months on from the implementation of the recast Markets in Financial Instruments Directive (Mifid II), the new trading and reporting rules have had little positive impact on market transparency, but have not adversely affected liquidity, according to senior fixed income and FX traders.

Speaking at the AFME European Trading & Market Liquidity conference in London in March, head traders from the buy and sell side concurred that in spite of the comprehensive requirements for pre- and post-trade reporting under Mifid II, transparency is not materially better or worse than it was before the European rules came into force on January 3.

“It is early days but the landscape is very fragmented in terms of reporting and post-trade transparency, and I don’t think there is any more transparency in the market today than there was in November last year,” says Juan Landazabal, global head of fixed income and foreign exchange trading at Deutsche Asset Management.

“So from that perspective, I think the objective has failed.”

Expansion

While the original Mifid rules, implemented in 2007, focused on the cash equity market, the review expanded its reach into other asset classes, including FX.

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