Market Transparency and Best Execution: Bond Trading under MiFID

PERSPECTIVES IN COMPANY LAW AND FINANCIAL REGULATION, M. Tison et al., eds., Cambridge University Press, 2009

20 Pages Posted: 21 Jul 2009 Last revised: 23 Jul 2009

See all articles by Guido Ferrarini

Guido Ferrarini

University of Genoa - Law Department and Centre for Law and Finance; European Corporate Governance Institute (ECGI)

Date Written: June 30, 2009

Abstract

The relationship between best execution and market transparency deserves careful consideration in an analysis of MiFID. Best execution has mainly been studied with respect to equity trading, which is generally exchange based and widely regulated also with respect to market transparency. In this chapter, however, I focus on bond trading, which takes place predominantly over-the-counter (OTC) and is not subject to MiFID’s transparency provisions. After introducing the topic (part I), I offer a critical view of the transparency requirements applicable to equity trades and their formation (part II). I then examine the recent policy discussion on non-equities market transparency, as reflected in the Report issued by the European Commission under Article 65 (1) of the MiFID, examining whether the requirements for pre-trade and post-trade information should be extended to non-equities markets (part III). I finally consider the role of best execution in bond markets, focussing on the impact of transparency on order execution for retail investors (part IV). In part V, I draw some conclusions.

Keywords: Best execution, trading venues, MiFID, bonds, financial markets

JEL Classification: G1, G2, G14, G15, G28, K22

Suggested Citation

Ferrarini, Guido, Market Transparency and Best Execution: Bond Trading under MiFID (June 30, 2009). PERSPECTIVES IN COMPANY LAW AND FINANCIAL REGULATION, M. Tison et al., eds., Cambridge University Press, 2009. Available at SSRN: https://ssrn.com/abstract=1436891

Guido Ferrarini (Contact Author)

University of Genoa - Law Department and Centre for Law and Finance ( email )

Via Balbi, 22
16126 Genova, 16100
Italy
+39 010 209 9894 (Phone)
+39 010 209 9890 (Fax)

HOME PAGE: http://www.clfge.org

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

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