, Columnist
Nobody Knows How Much Bonds Cost
Investors are okay at figuring out value, but they also need a price.
As you may have heard, people are worried about bond market liquidity. One problem is that banks don't want to trade bonds any more, because that is not such a good business in the modern regulatory environment. One potential solution for that problem is to have investors just trade bonds with each other, cutting out the banks as middlemen. But it turns out that doesn't work very well, in part because investors don't know how much bonds are supposed to cost, and need banks to tell them:
Oops.