Canada Bond-Market Service Offering Free Price Data Amid Review

CanPX, Canada’s government-mandated bond-market information service, will make trade prices freely available on its website amid a review by regulators concerned that smaller investors don’t have access to the data.

The for-profit joint venture of Canada’s major bond dealers and interdealer brokers has begun posting the previous day’s price and yield highs, lows and closing levels for all 340 corporate securities it tracks, CanPX said in a statement.

The move follows the Canadian Securities Administrators’ announcement last month it would review transparency in the C$390 billion ($363 billion) corporate bond market. The group, a coalition of Canada’s provincial and territorial securities regulators, questioned whether the private-sector model led by CanPX was working, and if more active regulation is needed.

“CanPX is excited at the launch of this new market-transparency offering which will provide useful and timely information on bond transactions,” Richard Van Nest, president of the service, said in a statement. “The availability of this information will bolster investor confidence and market participation.”

Until now, data from CanPX, was only available with paid subscriptions to certain market data providers. Bloomberg LP, parent company of Bloomberg News, competes with CanPX to provide data on Canadian bond trading.

‘No Context’

“We welcome additional transparency which levels the playing field for Canadian fixed income,” Andrew Torres, chief investment officer at the Toronto-based hedge fund Lawrence Park Capital Partners and a former debt-capital markets banker, said in an e-mail. “However I note that the information provided on the website gives no context for the price information.”

The information doesn’t include whether the prices shown represent dealer buys or sells, or in what size, for example, Torres said. He called it “inferior to information available in other jurisdictions” such as the U.S.

Unlike stocks, bonds aren’t traded on public exchanges. Transactions are private, with securities dealers acting as middlemen, giving the brokerages -- many of which are owned by banks -- an informational advantage.

It’s historically been more profitable for firms to trade bonds than stocks because the debt markets are less transparent, making it easier for brokers to take a bigger fee for each exchange.

In a June 27 statement, the regulatory group said it extended CanPX’s mandate as information processor for 18 months while conducting a review of the market. The CSA criticized CanPX for slowness in adding to the list of securities it covers and for not doing enough to make its information known, especially to individual investors.

U.S. System

CanPX provides information for less than half the number of investment grade and high-yield Canadian issues tracked by the Bank of America Merrill Lynch indexes. By contrast, the U.S. Trade Reporting and Compliance Engine, or Trace, which was created around the same time as CanPX with similar goals, says it offers data on all publicly traded U.S. corporate bonds.

In 2012, bond trading, including in government bonds, represented C$10 trillion of value, according to the Investment Industry Regulatory Organization of Canada. In comparison, equity trading was C$1.9 trillion in value, the organization said in a notice last year.

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