How are you getting ahead of impacts of recent regulatory proposals? Do you think there is more the buyside can do to increase their partnership in response?

Tighter regulations around the world have profoundly changed the financial markets landscape over the last few years. In many cases they have contributed to bring more clarity, in other cases they have created more ambiguity and uncertainty.

We have been very vocal during the latest approval process for MiFID II by taking an active role during the relevant consultation process as part of buy-side working group.

Our view is that, especially in Europe,  policymakers do not take on board enough feedback from the industry and that might lead to unintended consequences. This happens because often new legislation are initiated as an emotional immediate response to extreme crisis events or fraud cases. The risk in these cases is that the discussion around the table of policymakers might become too politicised and philosophical around topics that are sensitive for the public, such as ”more transparency is always good” and “less transparency is always bad”.

The risk is that the new legislation in the best case does not address the issue that was supposed to address and in the worst case it brings unintended consequence. In both cases it is a missed opportunity.

We envisage a greater role for supervisors, central banks and regulators towards creating a financial market environment where investors are protected by predatory behaviours and fair competition can be established among all market participants.

However, legislators should involve more the industry bodies in the consultation process in order to ensure that all interests are represented.

In Pioneer we have been very vocal during the latest approval process for MiFID II, both as part of buy-side working group and taking an active role during the relevant industry consultation process. With particular reference to transparency, we reiterate our view that we have always supported the idea that an appropriate level of transparency is necessary and beneficial. However, transparency should be a mean to bring certain benefits to the end investors and not an objective itself.

We remain convinced that transparency, especially in fixed income, is strictly correlated with liquidity and does not work for all markets. So we are in favour of the development of more transparent obligations as long as it enhances the price formation process and brings benefit to the end investors. In the more illiquid markets, instead, these challenges are harder to solve just imposing more transparency, because all you need is more liquidity, and in such markets more transparency might lead to the opposite effect.  We feel that the extension of pre-trade transparency without a proper calibration to the less liquid part of the market harm liquidity rather than improving it.

We feel that more efficient post-trade transparency with proper calibration to ensure market makers can absorb the risk and to protect liquidity across less liquid instruments might provide the transparency the market is looking for. )