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Board issues recommendations to boost transparency in corporate bond secondaries

An international organization has made seven recommendations to increase transparency and information on secondary corporate bond markets to regulators and the public.

The International Organization of Securities Commissions published Monday its recommendations in a consultation paper. The paper builds on a report published in March that examined the liquidity of secondary bond markets.

The organization is looking into corporate bond markets as a result of various developments since a 2004 report.

The latest paper looks at issues around regulatory reporting, transparency and the collection and comparison of corporate bond markets data across IOSCO member jurisdictions.

The IOSCO recommended regulatory authorities should have sufficient information to perform effectively their regulatory functions. Authorities should look at how they could enhance pre-trade transparency in corporate bond markets, and should implement post-trade transparency requirements for secondary market trading in corporate bonds. "Post-trade transparency requirements should include at a minimum, the disclosure of information about the identification of the bond, the price, the volume, the buy/sell indicator and the timing of execution," said the recommendation.

The IOSCO paper noted authorities should take into account the potential impact pre- and post-trade transparency might have on market liquidity.

In a news release accompanying the paper, the IOSCO said "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."

Any comments on the paper should be submitted to the IOSCO on or before Oct. 16. The paper is available on the IOSCO's website.