As an initial comment, we support IIROC’s intention to require extensive reporting on the Canadian debt market in order to build up a robust debt transaction database. While we are cognizant of and sympathetic to dealer confidentiality concerns, we remain convinced of the importance of sharing pricing data with the investing public, particularly information on the bid/ask prices and volume. We agree that stakeholder and industry consultation would be helpful in moving forward with any initiative regarding public transparency of transaction data and would be pleased to participate in any such consultation.
Overview of the Council’s Comments:
The CAC supports the requirement to report the pricing benchmark that has been used. Bonds are priced off of a spread to the benchmark, and in the event, an inappropriate benchmark is used, the price can be made to look more favourable (or, potentially, more suitable than it should be for a particular client). We respectfully disagree with the statement that IIROC need not require information on the mark-up or yield of an instrument if they are not specifically referenced in the trade confirmation. One of the stated regulatory objectives in proposing the new rule is the best execution and fair pricing. As the bond market commission may be rolled into the spread, it becomes an element of pricing, which is important to know if a determination is to be made with respect to fair pricing.