Another 48 Hours: Investors Question Possible Credit Trading Fix
- Market liquidity problems may be more linked to inventories
- Proposal to delay reporting times may not help that problem
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U.S. market regulators are proposing to test whether keeping large corporate bond trades secret for two days will spur more buying and selling. A better tack might be to make it easier for dealers to hang onto more securities, some money managers believe.
In the decade since the 2008 financial crisis, dealers’ holdings of corporate bonds have plunged thanks to new rules that make it more expensive for banks to keep the securities and limit banks from trading for their own accounts. Brokers used to buy big blocks of bonds from investors and sell them over time, but are now more inclined to just link up buyers and sellers directly. Tweaking standards for reporting trades won’t make dealers more willing to hold onto securities, said Josh Lohmeier, head of U.S. investment-grade credit at Aviva Investors, which manages more than $420 billion.