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In June 2023, the European Parliament and the European Council reached an agreement on a European Commission proposal calling for a review of rules on the structure of financial instruments markets.
One of the key elements of this proposal was the mandatory framework for an integrated tape that would bring together prices and volumes of various financial instruments from hundreds of execution venues into one stream.
Having corporate bond price and volume data in a single system can be beneficial for smaller trades, but it can come at the expense of liquidity for block trades.
Zornica Todorova, head of thematic macro research at Barclays, said faster disclosure and the introduction of integrated tapes will see more than 80% of European corporate bond market transactions reported in real time, up from 8% currently. He says it will increase.
Zornitsa Todorova, Barclays
“The tape will provide a single source of reference for prices and volumes, making trading data available to a wider range of market participants,” she says.
But when matching buyers and sellers quickly is difficult, as in the case of block trades, posting trade details puts market makers in an even more vulnerable position, exposing them to the risk of the market moving against them. It's possible, she warns. They mitigate risk and look for the other side of the trade.
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