IOSCO brainstorms on recommendations to improve transparency of corporate bond markets

The International Organization of Securities Commissions (IOSCO) has announced that it is currently making consultations for recommendations on how to improve transparency of corporate bond markets.

IOSCO is the leading international policy forum for securities regulators and is recognized as the global standard setter for securities regulation. The organization’s membership regulates more than 95% of the world’s securities markets in more than 115 jurisdictions, which continues to expand.

Such recommendations would help strengthen transparency of corporate bond markets in the various jurisdictions under the regulations of the organisation including Nigeria.

Identifying corporate bond markets as a significant part of the global capital markets and a critical source of financing for economic growth, IOSCO that various developments have impacted corporate bond markets since 2004.

This developments, according to them includes; changes in regulation as well as the market structure; the entrance of new participants; a shift from the traditional dealer-based principal model to an agency based model; the increasing use of technology among others.

“The Corporate bond markets are a significant part of the global capital markets and a critical source of financing for economic growth.

“Since 2004, various developments have impacted corporate bond markets. These include changes in regulation as well as the market structure; the entrance of new participants; a shift from the traditional dealer-based principal model to an agency based model; and the increasing use of technology.”

In response to these significant changes, the Board of the International Organization of Securities Commissions (IOSCO) agreed to examine the liquidity of secondary bond markets and published its findings in March 2017.

Also building on this report, the IOSCO Board also examined issues related to regulatory reporting, transparency and the collection and comparison of corporate bond markets data across IOSCO member jurisdictions

IOSCO also announced proposed recommendations for increasing transparency and the information on secondary corporate bond markets available to both regulators and the public.

“The consultation reports Regulatory Reporting and Public Transparency in the Secondary Corporate Bond Markets sets forth seven recommendations that update IOSCO´s 2004 report on Transparency of Corporate Bond Markets.

“It recommends that regulatory authorities should have sufficient information to perform effectively their regulatory functions. It also recommends that the regulatory authorities should look at how they could enhance pre-trade transparency in corporate bond markets and implement regimes that require post-trade transparency, taking into account the potential impact pre- and-post trade transparency may have on market liquidity.

“It is IOSCO’s view that an increase in publicly available information on corporate bond trading supports the price discovery process and enables participants in the corporate bond markets to make more informed investment choices and better assess execution quality. “These improvements have the potential to attract additional liquidity from both new and existing participants,” it added.