The Liikanen Report has opted for not providing any definition of proprietary trading or market making activities, which is the most sensitive issue when prescribing a mandatory separation. The ESBG is of the opinion that ring-fencing market making activities will substantially harm the liquidity of markets since banks will get incentives for winding down these activities. This will harm all markets also thosewith medium to low liquidity – especially for instance the secondary bond market, but also exchange traded funds, or investment certificates, which becomes even more harmful in.
