Market transparency and dealer behavior: Lessons from MiFID II/MiFIR transparency requirements

Vincent Lindner, Konrad Lucke and Loriana Pelizzon

No 119, SAFE White Paper Series from Leibniz Institute for Financial Research SAFE

Abstract: This policy paper examines the effects of the introduction of the MiFID II / MiFIR framework on the transparency regime for sovereign bonds. The main purpose of the framework is to provide markets with real-time information and lower market asymmetries, thereby increasing liquidity in the market. Combining regulatory transaction data from BaFin with MTS limit order book data, we find contrasting results. While mandatory trade reporting had the desired effect in over-the-counter markets, as it narrowed spreads and improved liquidity, the MTS limit order book tells a different story. Once quotes and trades became generally public, dealers reacted by widening spreads and curtailing their quoting agressiveness which ultimately undermined liquidity and deteriorated price discovery. These findings have important consequences for further market integration efforts under the Savings and Investment Union umbrella. Policymakers must carefully consider the unintended consequences of desirable policy outcomes, such as market transparency, and should tailor policy solutions to venue type.

Keywords: MiFID II; MiFIR; transparency; liquidity; sovereign bonds (search for similar items in EconPapers)
Date: 2026
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/339599/1/1967266557.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:safewh:339599

Access Statistics for this paper

More papers in SAFE White Paper Series from Leibniz Institute for Financial Research SAFE Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().