As a general alternative, only examine the number of trades in the context of a market where some dealers are consistently trading in the same issuers. A potential metric would involve a concentration restriction, where dealers that dominate trading are reviewed. For example, if one security had 100 trades / day and one dealer was responsible for 50% of those trades, that is the value that should be rewarded for illiquidity; a type of measurement that involves the trades per security over time.
Overview of the Council’s Comments:
The proposed market share threshold metrics are reasonable. We do not have any recommendations with respect to an alternative set of benchmarks.