managers contact group ( see the ecb website for more information on these groups ). see ecb opinion of 22 march 2012 on ( i ) a proposal for a directive on markets in financial instruments repealing directive 2004 / 39 / ec of the european parliament and of the council, ( ii ) a proposal for a regulation on markets in financial instruments and amending regulation [ emir ] on otc derivatives, central counterparties and trade repositories, ( iii ) a proposal for a directive on criminal sanctions for insider dealing and market manipulation and ( iv ) a proposal for a regulation on insider dealing and market manipulation ( market abuse ) ( con / 2012 / 21 ). see e. g. madhavan, a., “ consolidation, fragmentation, and the disclosure of trading information ”, the review of financial studies, vol. 8, no 3, pp. 579 - 603 and bloomfield, r. and o ’ hara, m., “ can transparent markets survive? ”, journal of financial economics, vol. 55, no 3, pp. 425 – 459. bis central bankers ’ speeches opacity enables the extraction of rents and can lead to increased price dispersion7, with negative consequences for market integrity and fairness. furthermore, a low level of posttrade transparency can significantly distort the informational role of prices by preventing the diffusion of value - relevant information, which may hamper market liquidity because of adverse selection. in line with this rather positive view of post - trade transparency, a number of empirical studies8 have found that the introduction of mandatory trade reporting has significantly improved formerly opaque market segments, such as the market for us corporate bonds. at the same time, one must be aware of potentially negative side effects. for example, liquidity providers may be reluctant to take on a large inventory position because they will find themselves in an unfavourable bargaining position if this information is known to others. they may ask for an additional premium in order to take on such a risk, which can raise transaction costs for investors. 9 similarly, very large market participants, such as pension funds, may find it more difficult to execute large transactions without being front - run by predatory traders. in very transparent markets such as those for equities, this has become a substantial concern. with these issues in mind, it is imperative that the new regulatory environment carefully considers all possible implications of increased market transparency. in particular, it is important that the new set

regulatory framework. for example, the g - sib framework currently penalises cross - border transactions within the banking union by attaching a higher systemic risk score to banks with more of such transactions. this goes against the very rationale of the banking union, as it reduces the incentives for cross - border transactions and risk diversification. the international regulatory framework should recognise the progress that has been made in the banking union and exclude intra banking union positions from the cross - jurisdictional indicators in the g - sib methodology. fourth, there are also some resolution related aspects that warrant further consideration. in particular, the allocation of internal mrel has turned out to be an area of tension between national jurisdictions. jurisdictions with a foreign bank subsidiary prefer to have a high pre - positioning of internal mrel to ensure an orderly resolution of its local subsidiary. however, this implies a certain degree of ring - fencing to the detriment of the foreign parent bank. the compromise reached by member states in the council only allows that internal mrel is 1 / 2 bis central bankers'speeches waived if the resolution entity and the subsidiary are located in the same member state, neglecting the fact that we have achieved so much in terms of joint supervision and resolution among euro area countries. to account for this progress, internal mrel waivers on a crossborder basis in the banking union should be allowed as this would contribute to continuous cross - border banking, e. g. by generating efficiency gains and promoting further integration. therefore, it should also be possible to use guarantees to replace internal mrel and allow for more flexibility in the allocation of resources within the banking union. of course, to install confidence it will be important to have adequate safeguards in place, including that there is no legal or practical impediments to the provision of support by the parent to the subsidiary, in particular when the resolution action is taken. 2 / 2 bis central bankers'speeches