New regulation for traders dealing with corporate bonds to share prices with the public is being discussed.
The spread of transparency in the bond market puts traders in a difficult position.
With increasing pressure, traders are forced to announce the prices they buy and sell bonds. This results in traders earning much lower profits. For this reason, traders oppose the new bill, which pressures them to reveal details even in much broader band transactions.
The US Financial Industry Regulatory Authority will begin issuing prices of privately held corporate bonds at the end of this month. While the US has been seeking to inform the public about the prices of corporate bonds since 2002, the European Parliament approved the rules for the same purpose in April. From now on, responsibility lies with the European Bonds and Markets Authority.
According to research by MarketAxess Holdings Inc, 46 percent of large corporations think that the European corporate bonds trade will become more difficult after the new regulation, while 41 percent think things will get easier.
Rick McVey of MarketAxess commented, “There is a lot of concern among major European investors and brokers about sharing too much information. But on the other hand, keeping the market more opaque and closed has been one of the factors that hinder the growth of the European bond market so far.”