The Association for Financial Markets in Europe (AFME) has reached an agreement with the Investment Association (IA) on a proposal for a future UK post-trade transparency model for corporate and sovereign bonds.
The framework aims to optimise timely transparency and ensure adequate investor and liquidity provider protection from risks associated with “overly prompt dissemination of sensitive information for very large trades”, AFME said. It has been developed in response to the FCA’s consultation on improving transparency in the bond and derivatives markets.
AFME stated that models proposed by the FCA in its consultation paper “have their strengths, but the associations believe that neither represents the optimal structure”. As such, the associations’ model combines the two into a hybrid framework. “This hybrid model does not represent a radical departure from the FCA’s options, but will lead to an overall better outcome than either of the FCA models individually,” the association added.
The model features two large in scale thresholds and specific caps on the transaction volume published after a four week deferral. Price and volume are reported at T+2 as opposed to the tier of deferrals included in the FCA’s Model 1, in which price would be reported at 15 minutes and volume at T+3.
Victoria Webster, managing director of fixed income at AFME, stated: “Establishing the correct balance on a revised framework for the bond transparency regime is a difficult task, particularly given the often opposing views from different parts of the industry. “Achieving alignment between our associations represents a coming together of the buy and sell side . We hope it will provide valuable input to the FCA’s decision making on the future UK post-trade transparency framework.”
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