SEC Chair Mary Jo White is shifting her aim and gunning for increased pricing visibility and transparency from the Wall Street brokerdealers engaged in providing pricing and trade execution in the $14 trillion dollar secondary marketplace for trading corporate and municipal bonds.
According to the Scott Patterson in his WSJ weekend journal column, :
“…To even the playing field, Ms. White suggested requiring public dissemination of the best buy and sell orders generated on private electronic networks for corporate and municipal bonds that are accessed primarily by market insiders.
Currently, investors typically see prices only after a trade is executed.
“This potentially transformative change would broaden access to pricing information that today is available only to select parties,” Ms. White said in a speech at the Economic Club in New York.
The effort comes amid a broader push by Ms. White to erode some of the trading advantages enjoyed by certain large traders that aren’t available to most rank-and-file investors. In a speech two weeks ago, Ms. White vowed to ratchet up oversight of computer-driven trading, a push that could ultimately dull the edge such high-speed traders enjoy.
The bond market initiatives, while still in the planning stage, could deliver a blow to big Wall Street banks that dominate bond trading, while benefiting regular investors who have largely been shut out of the inner workings of the bond market, observers said. Wall Street’s fixed-income businesses already are being buffeted by new rules on capital and risk-taking, and a drop in client trading.
Fund managers who invest in corporate and municipal debt would be among the biggest beneficiaries of the move, because they would have a better idea about how much supply and demand existed in the market for bonds they want to trade…”