FIA EPTA welcomes ESMA’s intention to provide more clarity, via future Level 3 guidance, regarding pre-hedging practices in RFQ markets. European RFQ markets have seen significant growth and development over the past years and we believe clarity on the situations where pre-hedging may be inappropriate (or not) will contribute to the greater efficiency and reliability of these markets for all participants. FIA EPTA members favour trading markets which are open, fair, transparent and competitive, thereby offering choice and efficient outcomes for end-investors while ensuring that these can confidently interact with dealer counterparties while seeking liquidity. In this regard, as a general principle, FIA EPTA members consider that a market structure which favours all-to-all trading in conjunction with appropriately calibrated pre- and post-trade transparency requirements ultimately constitutes the most effective environment for such benefits to crystallise.
