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