Corporate bond markets are a significant part of the global capital markets and a critical source of financing for economic growth. Since 2004, various developments have impacted corporate bond markets. These include changes in regulation as well as the market structure; the entrance of new participants; a shift from the traditional dealer-based principal model to an agency based model; and the increasing use of technology.
In response to these significant changes, the Board of the International Organization of Securities Commissions (IOSCO) agreed to examine the liquidity of secondary bond markets and published its findings in March 2017.
Building on this report, the IOSCO Board also examined issues related to regulatory reporting, transparency and the collection and comparison of corporate bond markets data across IOSCO member jurisdictions.
IOSCO published on August 14 its proposed recommendations for increasing transparency and the information on secondary corporate bond markets available to both regulators and the public.
The consultation report Regulatory Reporting and Public Transparency in the Secondary Corporate Bond Markets sets forth seven recommendations that update IOSCO ́s 2004 report on Transparency of Corporate Bond Markets. It recommends that regulatory authorities should have sufficient information to perform effectively their regulatory functions.
It also recommends that the regulatory authorities should look at how they could enhance pre-trade transparency in corporate bond markets and implement regimes that require post-trade transparency, taking into account the potential impact pre- and-post trade transparency may have on market liquidity.
It is IOSCO’s view that an increase in publicly available information on corporate bond trading supports the price discovery process and enables participants in the corporate bond markets to make more informed investment choices and better assess execution quality. These improvements have the potential to attract additional liquidity from both new and existing participants.
Comments on this consultation report should be submitted on or before 16 October 2017.