By Sarah N. Lynch
WASHINGTON, June 30 (Reuters) - Wall Street's self-funded
regulator on Monday began publicly reporting trade data for
certain kinds of private corporate bond deals, in a move that
will shed more light on a class of products that has operated
largely in the shadows.
The Financial Industry Regulatory Authority's reporting
initiative for some types of corporate debt trades followed new
rules, effective last September, which lifted an 80-year-old ban
on advertising for a variety of private securities offerings.
"We're excited to increase transparency in this opaque
market. The information will help professional investors and
contribute to more efficient pricing of these securities, as
well as inform valuation for mark-to-market purposes," said
Steven Joachim, FINRA's executive vice president of transparency
The post-trade price data that will now be made public on
FINRA's website pertains specifically to private corporate bond
deals offered to large institutional investors under a federal
exemption known in legal parlance as "144A."
Private deals offered under the 144A exemption are not
required to be registered with the U.S. Securities and Exchange
Commission, a measure that helps reduce capital-raising costs.
Only large institutional investors who own at least $100
million in investable assets are generally eligible to invest in
Historically, information about private securities deals has
not been readily available, compared with public offerings. That
was partially because the SEC had rules in place that restricted
public advertising about the deals.
The trend of offering less information, however, began to
change rapidly after Congress passed the Jumpstart Our Business
Startups (JOBS) Act - a law that aims to help ease restrictions
on raising capital - in 2012.
The law required the SEC to permit public advertising for
144A deals and other kinds of private unregistered offerings.
Now such deals can be discussed in radio, television and
Internet ads, though sales are still restricted to more
FINRA said retail investors will be able to access the 144A
trading data online, starting July 1, through its Trade
Reporting and Compliance Engine, known as TRACE.
In the first quarter of 2014, FINRA said 144A corporate debt
deals made up 13 percent of the average daily volume in
investment-grade corporate debt and 30 percent of the average
daily volume in high-yield corporate debt.
Monday's announcement marked the latest in a series of
recent actions by FINRA to shine more light on a variety of
areas in both equity and debt markets.
Earlier this month, FINRA began providing data about trading
volume levels at alternative trading systems like dark pools, a
type of venue that lets investors trade anonymously.
In 2012 and 2013, the regulator also started to report on a
variety of mortgage-backed securities.
Sometime next year, the regulator expects to start reporting
on other types of asset-backed securities transactions tied to
things such as credit-card debt and student loans.
(Reporting by Sarah N. Lynch; Editing by Jan Paschal)