The Canadian Securities Administrators aims to enhance bond market transparency by introducing uniform trade-reporting requirements for both corporate and government bond trades by the end of next year.
A staff notice published Thursday sets out proposed rule amendments that would expand the post-trade transparency requirements for corporate debt and introduce reporting requirements for government debt securities. The amendments are designed to produce consistent trade reporting for both government and corporate debt when fully implemented by the end of 2019.
The proposed rules would expand the existing corporate debt transparency requirements beyond dealers, marketplaces and inter-dealer bond brokers (IDBBs) to cover all trades in corporate debt securities. The would also establish new requirements for reporting trades in government debt.
The rules would also designate the Investment Industry Regulatory Organization of Canada (IIROC) to function as the information processor for this reporting. Subject to the CSA’s approval, IIROC will determine who’s required to report trades and the model for reporting and disseminating this information (including the publication delay and volume cap requirements).
Currently, corporate debt trades are publicly disseminated at midnight on T+2. Under the proposed new regime, IIROC would disseminate trading information on T+1 (5:00 pm ET).
“Mandatory transparency of debt markets supports investors in making informed trading decisions and is an important element of fair and efficient capital markets,” says Louis Morisset, chairman of the CSA and president and CEO of the Autorité des marchés financiers, in a statement.
The new rules would be adopted a phased basis, starting April 1, 2019, with the aim of having a uniform post-trade transparency regime in place by Dec. 31, 2019.
According to the CSA, the market for corporate and government debt securities in Canada totalled approximately $1.8 trillion by par value at the end of 2017, with more than $12 trillion traded in the secondary market during the year.
Comments on the proposals are due by Aug. 29.
IIROC welcomed the CSA’s proposals, particularly the regulators’ decision to expand IIROC’s role as information processor to government debt.
“This would be an example of the way IIROC can leverage the information it collects as a public-interest regulator to increase transparency and improve market integrity – without duplicating effort or cost,” said Andrew Kriegler, president and CEO of IIROC, in a statement. “Providing free, comprehensive information on debt securities trading helps to improve investment decisions by all market participants.”