Mifid II will strangle package trades, industry warns
The principle is clear: liquid trades will be subject to new European transparency rules from 2017, but illiquid ones will not. What’s not clear is the treatment of packages that combine liquid and illiquid elements – and the market is fearing the worst
The ability to trade a package of two or more instruments at one price, in one go, may become a thing of the past – or leap in cost – buy-siders fear, if incoming European transparency rules force dealers to disclose the details of all trades they conclude.
Popular packages combine multiple points on the over-the-counter swap curve, for example, or a variety of bonds, or a bond and a credit default swap (CDS) – reducing execution risk for the customer, which would otherwise have to trade each of
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