[Congressional Record Volume 145, Number 85 (Wednesday, June 16, 1999)]
[Extensions of Remarks]
[Pages E1274-E1275]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             BOND PRICE COMPETITION IMPROVEMENT ACT OF 1999

                                 ______
                                 

                               speech of

                          HON. ELIOT L. ENGEL

                              of new york

                    in the house of representatives

                         Monday, June 14, 1999

  Mr. ENGEL. Mr. Speaker, fellow colleagues, I rise in support of the 
Bond Price Competition Improvement Act of 1999. The Committee on 
Commerce and Subcommittee of Finance, of which I am a member, has held 
a number of hearings to review the process and competition in mutual 
fund fees and bond prices.
  Witnesses repeatedly testified that transparency of corporate bonds 
was poor. Witnesses also revealed that individual purchasers of the 
same bond from the same dealer at approximately the same time may be 
given widely divergent prices.
  Mr. Speaker, fellow colleagues, improved transparency of the bond 
market would lead to improved bond prices for investors, and increased 
transparency would assist the relevant regulators with development of 
an audit trail.
  In today's ever changing global economy, information is our most 
valuable resource. By improving the information available to investors, 
leading to more competitive prices for bonds, we hope to eliminate 
price discrimination and promote a more fair and competitive market.
  The Bond Price Competition Improvement Act, which is supported by the 
NASD, SEC and Bond Market Association has many advantages. However, the 
three economic benefits that I am mostly enthusiastic about are:
  1. It will bolster investor protection by providing investors with 
better opportunities to monitor the behavior of the entities that make 
markets in secondary securities;
  2. It will help improve market liquidity by boosting investor and 
market confidence in a market; and

  3. It will enhance market efficiency by boosting the price discovery 
process of moving toward the ``optimal price'' for a particular 
security.
  Market power invested in one bond dealer enables the dealer to charge 
prices that are higher than those that would be available in a fully 
competitive market. Due to the lack of transparency in the current bond 
market dealers sometimes offer the same bond to different customers at 
significantly different prices. This price discrimination is 
facilitated by the lack of pricing information to investors.
  I am convinced that improved transparency in the corporate debt 
markets as addressed in the Bond Price Competition Improvement Act will 
eliminate this practice.
  I would like to commend my fellow colleagues on the Commerce 
Committee, committee staff, and legislative staff on working together 
to draft this important bill and I hope that we can continue to work 
together in this spirit of bipartisanship in the future.
  Mr. Speaker, Congress is at its best when we work together to solve 
problems such as these. The American people deserve nothing

[[Page E1275]]

less. The Bond Market Price Competition Act of 1999 is an important 
piece of legislation that will preserve this country's place as a 
leader of bond market transaction in the international marketplace.
  I urge my colleagues to vote in favor of this bill.

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