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SEC Said Examining Hidden Electronic Bond Trading Prices

The practice of dealers showing clients different prices for the same securities on electronic bond-trading platforms is drawing the scrutiny of the U.S. Securities and Exchange Commission, which is concerned that smaller investors are being penalized.

SEC regulators want to understand why brokers sometimes block their rivals and clients from seeing some of their prices for municipal, corporate and other bonds, according to a person with direct knowledge of the inquiry. They’re examining whether being able to turn quotes on and off allows market manipulation, and whether smaller buyers are given worse prices, the person said.