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Liquidity at heart of MiFID debate 

August 5, 2014
Christopher Whittall, Reuters

As a consultation on landmark reforms that will irrevocably change the face of European financial markets draws to a close, a fundamental and deceptively simple question remains at the centre of the regulatory debate: how to define market liquidity.

At stake is the range of products that will be captured by beefed-up pre and post-trade transparency requirements under the EU's Markets in Financial Instruments Directive and channelled into organised trading facilities - the equivalent of the US's swap execution facilities.

The end result will have far-reaching consequences, with MiFID II establishing new standards for trading the full gamut of financial instruments - from structured products, to corporate bonds, to OTC derivatives.

"MiFID is so aggressive and life-changing in all respects, particularly the transparency piece in terms of the impact on market structure," said Damian Carolan, partner at Allen & Overy.

Read more: Reuters

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