A regulatory proposal to allow expanded automated bond trading will make the bond market more transparent, the New York Stock Exchange says

The U.S. Securities and Exchange Commission is considering an exemption allowing NYSE members and member organizations to trade certain unregistered debt securities on the NYSE’s Automated Bond System. The NYSE says that under the proposal it could add a substantial number of existing bonds to the ABS, “making the benefits of real-time quote and price transparency available to the bond investing public.”

The ABS is an electronic bond-trading platform accessible to NYSE firms over the Internet. It primarily offers retail trading in corporate bonds. The ABS matches orders on a strict price and time priority basis and reports quotations and trade prices on a real-time basis. Bonds traded through ABS include debt of NYSE equity issuers and their wholly owned subsidiaries, convertible bonds and debt not required to be registered, including U.S. government bonds, agency issues, international banks, and state and local bonds.

The proposed exemption would apply to debt that satisfies several conditions, including that the issuer has at least one class of equity securities listed on the NYSE. The class of unregistered, unlisted debt securities that could be traded on the ABS would be limited to straight-debt securities. It would not include convertible debt, structured products, debt issued by listed company subsidiaries that are not wholly owned, foreign government debt, and debt issued by an issuer that does not have equity securities listed on the NYSE.

“The SEC’s proposal represents a big win for fixed income investors. It will facilitate their access to a much broader range of bonds on our ABS platform, providing them with the unparalleled transparency of real-time bond quotes and real-time bond trade reports,” said Robert McSweeney, NYSE senior vice president of competitive position. “The ability to significantly expand ABS’s inventory of debt issued by NYSE-listed companies also supports our commitment to diversify our marketplace as a multi-asset class venue for our customers.”