Aug 25, 2015 Two European trade bodies have drawn up a code of conduct, which they say will help fund managers more accurately find market liquidity. The Association for Financial Markets in Europe (AFME) and the Investment Association released a statement today saying they are working with trading platforms and that Bloomberg has already agreed to honour the new code. Under the new code, a distinction will be made between two types of ‘indications of interest’ - which are used by brokers to express their willingness to trade at a given price. Those that can be settled immediately without market impact will be labelled as ‘client natural’ and those that may involve information leakage and market impact will be labelled as ‘potential’. According to the media statement, Bloomberg has agreed to adopt the categorisation. Daniel Godfrey, chief executive of the Investment Association, said: “The investment industry is taking a lead on improving the efficiency of equity capital markets. “Our framework will limit potentially misleading market noise, allow investment managers to see where the real liquidity is and obtain the best price to the benefit of their clients.” Simon Lewis, chief executive of AFME, added that the consensus between fund managers and brokers was ‘encouraging’. Joe McGrath +44 (0)20 7397 3819 joe.mcgrath@information-partners.com
AFME in Europe ( the Investment Association ) and the Investment Association have produced a new code of conduct which reportedly will lead to an improvement in the efficiency of equity capital markets. the Investment Association is the first to agree to follow the new code and the new categorisation imposed by it. The code differentiates between 'indications of interest' which brokers use to signal an interest in a trade at a given price. Those which are settled immediately without market impact will be categorised as ''client natural' whereas those which may involve information leakage and potential market impact will be labelled as 'potential'.