CSA Seeks Comments on Regulation of Fixed Income Market

par | September 22 2015 09:19AM

Louis Morisset, CSA chairman.

The Canadian Securities Administrators (CSA) are seeking comments on how best to regulate and ensure transparency in the fixed income market.

On Sept. 17, the CSA published Notice 21-315, which outlines plans to enhance the regulation of the fixed income market in Canada. The CSA refers to a report published by the Ontario Securities Commission (OSC) in April of this year, which pointed to a number of shortfalls in how the $2 trillion market is currently managed.

In particular, the OSC report noted that the fixed-income data currently available is limited and fragmented, and that larger players have more bargaining power in the decentralized, over-the-counter system than smaller investors. The OSC also pointed out that there are a limited number of electronic and alternative trading systems for corporate bonds. As a result, direct retail participation in the fixed income market tends to be low and most people have to buy their bonds through investment funds.

The CSA intends to begin by focusing on increasing transparency for corporate debt securities. The CSA has determined that IIROC should act as an information processor for corporate debt securities and will publicly disseminate trade information, subject to a dissemination delay and volume caps.

“Ensuring fixed income data is available to regulators and enhancing corporate debt transparency are significant steps in modernizing the regulatory framework for the fixed income market,” says CSA chairman Louis Morisset. “The CSA’s plan covers these key areas and lays the groundwork for future policy work.”

The Notice can be found on the various CSA member websites, and comments are to be submitted by Nov. 1, 2015.

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