To further boost bond market transparency, U.S. regulators started publishing transaction data for private corporate debt trading today.
The Financial Industry Regulatory Authority (FINRA) began publicly disseminating data for so-called Rule 144A transactions today — which involves resales of restricted corporate debt securities to large institutions.
This trading represents a significant portion of the volume in corporate debt securities. For example, FINRA reports that in the first quarter of 2014, these transactions made up nearly 13% of the average daily volume in investment-grade corporate debt; nearly 30% of the average daily volume in high-yield corporate debt; and, almost 20% of the average daily volume in the corporate debt market as a whole.
The move to publish transaction data on this part of the market brings transparency to a market that had previously operated in the dark, FINRA says. It notes that, last year, the U.S. Securities and Exchange Commission (SEC) lifted the prohibition against general solicitation and general advertising in offerings of 144A securities, and FINRA says that it believes that bringing post-trade price transparency to 144A transactions in corporate debt “is in harmony with the changes approved by the SEC.”
“We’re excited to increase transparency in this opaque market. The information will help professional investors and contribute to more efficient pricing of these securities, as well as inform valuation for mark-to-market purposes,” said Steven Joachim, executive vice president, transparency services, at FINRA.
Market professionals are able to access the data through major market data vendors. And retail investors will get free access to the data through FINRA’s Market Data Center starting July 1.