Thanks to Google I’ve been in contact with Mr. Fred Siesel, formerly of the NYSE, and am learning a lot more about the issue of Exchange trading of bonds.
There is no question that investors will be better served by the transparency of the new bond platform of the NYSE Exchange. Here is a summary from Mr. Siesel’s recent letter to the SEC Commissioners which he shared with me and you can download below. This details the differences between over the counter platforms that report trades through TRACE and the exchange trading of bonds (through the NYSE platform).
|
Exchange (NYSE ABS ) |
Over-the-counter (TRACE) |
| Disseminates actionable pre-trade quotations | None…TRACE only reports completed trades. |
| Trades are reported at actual trade prices | Price reports include undisclosed mark-ups/mark-downs. |
| Trades are reported real-time | TRACE reports trades within a fifteen-minute window |
| ABS trades are reported in precise sequence | TRACE trade reports are not |
| An auction market allows the public to be part of the quote | An OTC dealer market does not |
| ABS has trading rules | OTC market does not |
| Provides a complete and accurate surveillance audit trail | TRACE does not |
Although Mr. Siesel and I have some slight differences in our view of some of these issues I really appreciate his persistance in bringing these very important issues to regulators. I have never come across anyone who has so passionately argued for individual investors and fixed income. Thank you…investors owe you a debt of gratitude.
Mr. Siesel’s full letter here….Siesel_SEC_Sept06.doc
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