The European Covered Bond Council (ECBC) and the Association for Financial Markets in Europe (AFME) have today announced a new joint recommendation to enable greater transparency for secondary market ‘tap’ covered bond transactions.
A ‘tap’ covered bond issuance is a privately placed trade between two counterparties, often large in size, which is transacted off-exchange. Consequently, knowledge of the transaction is not available to market participants unless they are involved in the trade, which gives rise to the problem of asymmetrical information.