Salient to Investors:

BlackRock said:

  • The corporate bond market is broken and needs improved liquidity.
  • Corporations should be encouraged to issue debt with more standardized terms.
  • The dangers of price gaps and scant liquidity have been masked in a benign, low interest-rate environment.
  • New rules prompted Wall Street bond dealers to cut their inventories even as the market expanded, thereby greatly reducing their capacity to act as market makers and rendering the old OTC outdated.

Greenwich Associates said the top 10 dealers control more than 90% of trading

SEC member Daniel Gallagher said the risk posed by investors trying to dump bonds after the Fed raises interest rates is percolating right under the noses of regulators.

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