MiFID Spells Decline of Off-Exchange Bond, Derivatives Trading

  • Deloitte survey indicates shifts to trading venues from OTC
  • Survey of 12 buy-side firms shows impact of rule from February

Hatheway, Brush on MiFID II Winners and Losers

The European Union’s MiFID II law is expected to drive a significant, rapid shift in trading of bonds and derivatives to electronic and other trading venues.

A Deloitte survey of a dozen buy-side firms with a total of more than $6 trillion in assets under management showed that the law will lead to a decline in private, over-the-counter, trading in many common contracts. The survey was conducted in September. The revised Markets in Financial Instruments Directive, or MiFID II, starts on Jan. 3.

“MiFID II will transform the market structure for non-equities, with a significant reduction in OTC volumes in favor of transactions on venues,” Deloitte said on Wednesday in the report, which covers government and corporate bonds, as well as interest-rate, credit and foreign-exchange derivatives.

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