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Professor Who Helped Pop Junk Bubble Says Trace Slows Trade

The decade-old system of publicly reporting U.S. corporate bond transactions reduced trading while cutting price volatility in the $4.2 trillion-a-year market, according to the Massachusetts Institute of Technology and Harvard University.

High-yield bonds were affected the most, according to the study using data from the Financial Industry Regulatory Authority’s Trace bond-reporting system, which was introduced in four stages beginning in 2002. In the 90 days after the final three phases started, trading fell 15.2 percent and price dispersion shrank 8.5 percent, the study dated Sept. 4 found.