Euro swap bid/offers edge to decade lows

Mifid II and extreme competition raise profitability concerns for euro rates market-makers


Bid/offer spreads on many European rates products have more than halved since the start of 2017, bringing them to decade lows in some cases and hurting profitability for market-makers.

After rising at times in 2016 and 2017, spreads on European sovereign bonds and euro interest rate swaps have ground lower during the past two years. Some dealers blame the declines on the macro environment, increased competition, investors looking to meet best execution rules – or a combination of the three.

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