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Liquidnet's most recent Liquidity Landscape report produced explores the outlook for European markets in 2023 in terms of regulatory policy, market liquidity and the impact of the increased use of technology in trading. The report also examines some of the lessons learned from 2022.
Looking at the year ahead, key findings include:
- The lack of progress in MiFID/R policy objectives and the current impact on liquidity formation are likely to lead to further political influence both in UK and EU to stimulate secondary markets activity. The focus for both regulators is based on a need to enhance data transparency and the harmonization of reporting to bolster confidence in markets.
- The requirement for mandated data provision in pre-determined formats is likely to lead to greater penalties for non-conformance.
- With the majority of cash management cycles at T3 or even T4 but trading at T1, there is a growing mismatch between cash and asset flows at a time of tightening margins and rising interest rates, and options for fund managers are shrinking.
- ESMA’s role as a data and information hub which means closer scrutiny on the different ways in which AI and Machine Learning are now used in trading, risk management, and the robustness of market resiliency from market manipulation.
- ESMA’s mandate to deliver a Bond Consolidated Tape, but the European regulator is also instructed to start the selection procedure for shares and ETFs within six months.
The report also addresses topics such as levelling the playing field between lit and dark trading, improving regulation of equity trading, the possible banning of payment for order flow (PFOF), etc.
Click here to downlod the full report.
