The Markets in Financial Instruments Directive II (MiFID II) has failed to boost competition, investor protection, and transparency in European bond markets.
That is the stark conclusion of a report from the International Capital Market Association (ICMA), which said cost disclosures in primary markets have had "little substantive impact".
Other than increased administrative burdens, obligations regarding allocation justification recording have also made little difference, according to ICMA members.
Moreover, the introduction of PRIIPs regimes has led to drop in low-denomination bond issuance and restricted opportunities for retail investors.
ICMA chief executive, Martin Scheck, said: "Despite the resource commitment to meet the obligations of MiFID, our members, both buy and sell-side, are not yet seeing the benefits.
"Data quality and accessibility were cited as particular concerns, although they do understand that it will take time for the many challenges to be addressed and for benefits to accrue."
The introduction of MiFID II and regulation (MiFIR) on 3 January 2018 was expected to be the most significant development for European bond markets in memory.
One objective for secondary markets was to encourage trading on regulated venues rather than in the over-the-counter market, with evidence suggesting this has worked.
However, the ICMA said there are ongoing issues, particularly with respect to the transparency regime and the accessibility and quality of pre- and post-trade data.
"The implementation of MiFID II/R seems to have missed an opportunity to provide a utility based consolidated tape for fixed income," the association added.
It was also found that many firms are finding it difficult to decide what FICC research needs to be paid for, and that there seems to be a need for more regulatory guidance.
Although the number of research providers used by companies has fallen, most firms are not overly concerned that this will have a negative impact on investment performance.
"ICMA and others continue to work with the authorities and market participants to help harmonise approaches and improve the effectiveness of the regulation," Scheck added.