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FSA warns on risks of increasing retail bond market access

The FSA has warned of the risks associated with increasing retail access to the bond markets. 

In a speech about the regulatory challenges and developments in the bond markets at the Euromoney bond investors congress in London, FSA managing director of risk Sally Dewar commented on the launch of the London Stock Exchange’s new electronic order book trading platform for corporate and UK government bonds in response to investor demand. 

She said: “While we see this as a positive development, with the potential to bring benefits to both firms and consumers, there are also risks associated with increasing retail access. For example, authorised firms will need to fully explain to their retail clients the potential risks associated with buying corporate bonds.”

However, she added that the introduction of market makers and the continuous availability of trading data during trading hours will make pre-trade information significantly more transparent.

She said: “In addition, post trade data will be published almost immediately and trade reports will contain the same information as is currently available for other relevant markets. This is a new market for the LSE and broadens access to bond markets within the UK.” 

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