The Bank of England has responded to the European Commission's call for evidence on the EU regulatory framework for financial services. In its response, the Bank highlights those areas where it considers that some adjustment is needed, where reforms are not working as intended or where there are conflicts between different elements of the framework. These include: (i) pre and post-trade transparency under MiFID II – the Bank suggests that ESMA's draft MiFID II technical standards concerning pre-trade reporting could have a harmful effect on the liquidity of derivative and corporate bond markets; and (ii) the CRD IV bonus cap - the Bank considers that the bonus cap has had the unintended consequence of encouraging higher fixed pay through salary increases and believes that it is preferable to use mechanisms such as the deferral of variable pay and the application of malus by firms to clawback deferred variable pay.