[Congressional Record (Bound Edition), Volume 145 (1999), Part 5]
[Extensions of Remarks]
[Page 6559]
[From the U.S. Government Publishing Office, www.gpo.gov]




 INTRODUCTION OF H.R. 1400 ``BOND PRICE COMPETITION IMPROVEMENT ACT OF 
                                 1999''

                                 ______
                                 

                         HON. EDWARD J. MARKEY

                            of massachusetts

                    in the house of representatives

                       Wednesday, April 14, 1999

  Mr. MARKEY. Mr. Speaker, I am pleased to join with Representatives 
Bliley, Dingell, Oxley, Towns and several other Members of the 
Subcommittee on Finance and Hazardous Materials in introducing aimed at 
improving price competition in the nation's bond markets.
  Price Transparency, or the dissemination of market quotation and 
transaction information, is of critical importance to investors in our 
nation's securities markets. Experience has shown that price 
transparency produces several important benefits. It can help to 
improve the liquidity and efficiency of a market by assuring that 
comprehensive price and trading information is disseminated to as many 
market participants as possible, so that the market price of securities 
will move more quickly to reelect the underlying economic value of the 
security. In addition, price transparency provides investors with 
greater protection from abuses by reducing the disparity of information 
that may exist between market ``insiders'' and ``outsiders'' and 
providing public investors with more equal access to information that 
is available to primary and other dealers.
  With equal access to pricing information, investors in stocks or 
bonds can better evaluate the quality of execution and the value of 
their securities. This information is particularly useful for investors 
evaluating prices for less actively traded securities, where bid-asked 
spreads may be wider. Such data also can encourage competition among 
dealers and assist regulators in discovering possible manipulation, 
fraudulent mark-ups, or other wrongful conduct, or in determining the 
state of the market at any point in time.
  In 1975, the Congress directed the SEC to facilitate the creation of 
a National Market System for qualified securities. When the Congress 
enacted that legislation, it did not limit its application merely to 
stocks but to all securities--including debt securities. In fact, the 
only type of securities that were not included were so-called ``exempt 
securities''--Treasury bonds, government agency securities, and 
municipal securities. At the time this legislation passed, there were 
many in the broker-dealer community who opposed it. But some 24 years 
later the Dow Jones Industrial Average has topped the 10,000 mark, and 
all observers agree that our stock markets are much more efficient and 
more liquid in large part due to their increased transparency. However, 
over the years the SEC has not made much use of the powers Congress 
granted it in this area to bring transparency to the corporate bond 
market.
  The legislation we are introducing today would direct the SEC to use 
the authorities Congress granted it back in 1975 to issue rules or take 
such other actions as may be necessary or appropriate, to improve price 
transparency in the corporate bond market. Specifically, H.R. 1400 
would mandate that the SEC assure the prompt, accurate, reliable, and 
fair collection, processing, distribution, and publication of 
transaction information in the corporate debt market. This would 
specifically include, but not be limited to, last sale information. The 
SEC is directed to assure that such information is made available to 
all exchange members, broker-dealers, securities information 
processors, and all other persons. In determining the rules or other 
actions to take under the subsection, the SEC is directed to take into 
consideration, among other factors, private sector systems for the 
collection and distribution of transaction information on corporate 
debt securities. Finally, the bill provides for a study by the General 
Accounting Office of measures needed to further improve price 
transparency.
  I support this initiative because I believe that bond investors 
deserve to get full access to the type of market information that will 
better enable them to determine whether they are getting the best price 
for their buy and sell orders. I know that Chairman Levitt has already 
taken some preliminary steps to move the industry forward in this area, 
and that as a result of his leadership, the NASD is currently 
considering rule changes which would create transparency and audit 
trail systems for the corporate bond market. In addition, I understand 
that the bond dealers have also stepped in with a plan to make certain 
market information available. I welcome each of these initiatives, and 
would suggest that the legislation we are introducing today should be 
seen as complementing them by underscoring the determination of the 
Congress that effective and comprehensive action will be taken in this 
area.
  I urge my colleagues to support this bill as it moves through the 
legislative process.

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