The head of the European Union's securities watchdog sought to ease concerns that planned rules to boost the transparency of bond markets would drive away investors and harm growth.
"This idea that we are there to try and harm the market is obviously not on our table," Steven Maijoor, head of the European Securities and Markets Authority (ESMA), said in an interview after a public hearing with European Parliament lawmakers in Brussels on Tuesday. "We want to have successful bond markets."
ESMA proposed in December to increase pre- and post-trade transparency requirements for bonds and swaps as part of work to implement EU financial markets legislation known as MiFID II that was approved last year.
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The Association for Financial Markets in Europe, which represents firms including Deutsche Bank AG and HSBC Holdings Plc, said the plan's definition of market liquidity would damage trading by applying the transparency standards too broadly. The view was echoed by other firms that responded to an ESMA consultation that closed earlier this month.
"I expect that our final technical standards will be developed further compared to our December draft," he said. "We need to calibrate carefully."
Maijoor told lawmakers that only a "very small" number of bonds would be covered by the transparency push, accounting for "less than 10 percent" of the market. The regulator plans to carry out further work on the standards, he said.
Traders would have to disclose prices publicly on at least 190 billion euros (US$208 billion) of corporate securities under the ESMA proposals, Bloomberg calculations based on the regulator's guidelines show.
The rules on pre-trade price disclosure target bonds traded on exchanges and other regulated platforms. They apply to instruments judged to be liquid, with a system of exemptions in place to shield some trades, such as large block transactions.
The agency is now considering how to take the plans forward. The rules, along with other parts of MiFID II, are set to take effect in January 2017.
ESMA's plans respond to the "very clear intention" of legislators to boost bond market transparency, Maijoor said. Evidence from other markets, "especially the U.S.," suggests that more transparency "has improved market functioning."
Still,"we obviously do not want to go in the direction where more transparency results in stopping liquidity in markets," he said.
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