Finding ways to improve the Trade Reporting and Compliance Engine was debated by a panel at the Milken Institute Global Conference on Monday.
Amy Koch, managing director and head of fixed-income trading at Standish Mellon Asset Management, said TRACE is a great way to help traders with liquid securities, but “it is a different story when you talk about the tails of the market.” Ms. Koch said it decreases liquidity for already illiquid fixed-income instruments.
Michael Piwowar, commissioner at the Securities and Exchange Commission, said an important question is, “What is the optimal amount of transparency to create the most amount of liquidity in the market?”
Fred Orlan, global head, fixed income at Jefferies, said there needs to be a longer delay in the time that is required for a trade to be reported to the database. Mr. Orlan said one could potentially base a disclosure delay on the size of the issue or the liquidity of the bonds. He said the question should be “how can we make TRACE better?”
Michael Freno, head of the U.S. high-yield investments group at Babson Capital Management, said “tweaking” the rules could help. “I can see where (Wall) Street has issues,” he said.