The Ontario Securities Commission sign is seen in the regulator's Toronto office.Peter Power/The Globe and Mail
Why does Canada not have a good public system for displaying bond trading? The country's banks and fragmented regulatory system are at the root of the issue, according to Maureen Jensen, the executive director and chief operating officer of the Ontario Securities Commission.
On a panel at the OSC's annual Dialogue conference, the focus turned to why markets other than stocks are still so opaque. We have a lot of data, but it doesn't make it to investors. Consequently, those who make markets in areas such as bonds can still get away with wider spreads than in stocks.
The official title of the panel was "Regulating for Investors in a Technological Age." The discussion quickly moved to how to make other markets as visible as equities. The next five years in the U.S. are going to be ones where regulators focus on fixed income markets and make them more visible, said Richard Ketchum, head of the Financial Industry Regulatory Authority (FINRA), the U.S. self-regulatory body for financial dealers.
Arguably, the U.S. already has a big lead on Canada in that regard because of the TRACE system that FINRA runs. Dealers have to report corporate bond trades to TRACE. That data is then available to market users through financial information providers.
Why doesn't Canada have an equivalent, challenged another panelist, markets entrepreneur Doug Steiner?
The answer, Ms. Jensen said, is twofold. There's the fragmentation of the regulatory landscape in Canada, and the concentration of dealers.
That of course is a reference to the fact that the biggest bond dealers in Canada are a handful of bank-owned firms. They have every incentive not to share such data, because it will cut into profits.