Discussion paper on transparency and liquidity on the mortgage-credit-bond market

New EU legislation entails that, later this year, the Danish FSA will have to decide possible exemptions from requirements regarding trade transparency on non-equity markets, including the market for mortgage-credit bonds. The Danish FSA has published a discussion paper on the topic to ensure public debate and a solid decision base.



Anders Balling
33 55 83 64

The point of departure in the discussion paper is that the Danish FSA will have to find a balance between conflicting interests with regard to determining the optimal level of trade transparency.


On the one hand, a high degree of transparency has a positive effect on markets through higher liquidity and more competition. In brief, it is easier for investors to assess the prices offered on the market, and their assessments will be better. It also strengthens investors’ confidence that they are trading at fair prices, and this in turn can attract more investors and enhance turnover.


On the other hand, a high degree of transparency can have negative consequences for the market, particularly because transparency can reduce liquidity. Therefore, it can become more difficult for market participants to execute larger transactions quickly, at low cost, and with a modest effect on prices.


Read the discussion paper here.