.png)
Two months have passed since the FCA’s transparency regime took effect on 1 December 2025, whereas the equivalent ESMA framework for bonds will follow in less than a month (the new ESMA OTC derivative rules are not expected to come in until March 2027).1
Over the course of the last two months, we have monitored the activity reported under the new FCA regime to see if any standout trends emerged. We look forward to seeing the impact when the first three-month deferrals are released (around the same time the new ESMA regime goes live).
What has been happening?
We often get asked about the actual reporting times (as opposed to the deferral times outlined in the FCA guidance)2. Chart 1 breaks down the observed reporting into 12 different time bands.
These start at sub one minute (real-time for all practical purposes) and go out to indefinite (which is no longer applicable to FCA-reported trades, but still exists for ESMA at the moment).
.png)
By looking at sovereign bond activity, we can see that a huge proportion were indefinitely deferred under the old FCA regime (and continue to be for ESMA). However, under the new FCA regime, reporting timelines have dramatically reduced, with billions now reported in real-time or by COB the next business day.
Factors to consider
Historically indefinite deferrals on sovereign bonds heavily influenced reporting timelines, however in the corporate bond space, the most typical deferral was four weeks. This too has changed dramatically, with corporate bond reporting times showing a similar pattern to sovereigns, with a healthy amount now reported in two weeks or less (and a sizeable proportion of this now in (real-time).
It is important to note that the FCA has a specific category of deferrals for High Yield (HY) bonds, whereas EMSA has chosen to put any non-Investment grade (IG) corporate bond into a single category.
Given the time of year, we do get asked about seasonality (i.e. could the volumes be lower, given the new regime began in December); however, Chart 2 below suggests otherwise.
.png)
From the data, it is apparent that volumes are not as seasonal as one might expect. In fact, over the last few years they are fairly evenly distributed across the year.
This flies in the face of conventional wisdom, with many subscribing to the infamous line “Sell in May and go away” 3 (referring to the idea that traders can if traders can clear out their inventory by May, they can then relax on holiday over the summer). This suggests that when the three-month deferral data is released, we should expect the volumes to be (roughly) in line with the 2025 daily average volumes, however we will have to wait and see!
We will be implementing the necessary changes for the ESMA regime shortly and will be producing regular transparency related content, so keep a look-out for these updates over the coming weeks.
2 https://www.fca.org.uk/publication/policy/ps24-14.pdf
3 https://www.investopedia.com/terms/s/sell-in-may-and-go-away.asp
.png)
.png)
.png)