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Investment Association calls for increased transparency in the fixed income market

Tuesday 6th November

The Investment Association (IA) is calling for increased transparency in the fixed income market by proposing measures to increase the availability of data on bond trades in a paper published today, ‘Fixed Income Best Execution: Not Just a Number’.

The lack of data has increasingly come under the spotlight, as under MiFID II asset managers are now required to demonstrate how they are achieving the best possible results for investors when executing bond orders.

As the bond market evolves and becomes increasingly digitalised, data should become more readily available; however this is taking place at a slow and uneven pace and data remains excessively expensive.

In order to increase the availability of data in the fixed income market and improve transparency, the IA therefore recommends:

  • The development of a consolidated tape, an electronic system which would provide real-time data on trading volume and price;
  • Regulatory efforts to reduce market data costs.

Galina Dimitrova, Director of Investment and Capital Markets at the IA said:

“Asset managers are concerned that the poor availability of data in the bond market is undermining transparency. A well-functioning bond market is essential to allow companies to borrow more affordably, enabling economic growth and the creation of jobs. Our recommendations aim to improve the availability of data, which will ultimately deliver better returns for end investors.”

In addition to the lack of data, demonstrating best execution is also more challenging in comparison to the equities market, as it is less liquid and lacks continuous pricing. The IA is therefore recommending a more nuanced approach to best execution for bonds which is anchored in the context of the investment process.

-Ends-

Notes to the Editors:

To view the paper, ‘Fixed Income Best Execution: Not Just a Number’

For media enquiries:

Anisha Patel, Head of Communications: anisha.patel@theia.org
T +44 (0)20 7269 4635

Helen Ayres, Media Relations Manager: helen.ayres@theia.org
T +44 (0)20 7269 4696, M +44 7508 724066

About The Investment Association

  • The IA champions UK asset management, supporting British savers, investors and businesses. Our 250 members manage £7.7 trillion of assets and employ around 100,000 people across the UK.
  • Our mission is to make investment better. Better for clients, so they achieve their financial goals. Better for companies, so they get the capital they need to grow. And better for
  • the economy, so everyone prospers.
  • Our purpose is to ensure investment managers are in the best possible position to:
    • Build people’s resilience to financial adversity
    • Help people achieve their financial aspirations
    • Enable people to maintain a decent standard of living as they grow older
    • Contribute to economic growth through the efficient allocation of capital.
  • The money our members manage is in a wide variety of investment vehicles including authorised investment funds, pension funds and stocks and shares ISAs.
  • The UK is the second largest investment management centre in the world, after the US and manages 37% of all assets managed in Europe.