Number of banks per RFQ jumps in EU, posing risk to prices

Some requests for quote are sent to over 20 dealers, raising worries about information leakage

Dealers fielding buy-side requests for quotes on swap trades are facing sharply increased competition from other banks, due to a recent clarification from European regulators. And the impact on prices may be the opposite of what regulators intended.

A March 28 Q&A on the second Markets in Financial Instruments Directive (Mifid II) says a trading venue should not impose limits on the number of participants that a firm can request a quote from. That number has since soared, with two swap traders