This thing called transparency is spreading in thecorporate-bond market, and it's hurting traders' bottom lines.

Credit traders are increasingly being forced to publish theprices at which they bought and sold securities. They're reapingsmaller profits as a result, so it's no wonder they're negative onnew proposals requiring them to report details on an even broaderswath of debt trades.

In the U.S., the Financial Industry Regulatory Authority (FINRA)will start disseminating prices on privately sold corporate debt atthe end of this month. While the U.S. has required some publicdisclosure of corporate-bond prices since 2002, the EuropeanParliament just approved a similar set of rules in April, which theEuropean Securities & Markets Authority now has the task ofdefining.

About 46 percent of bigger institutions think it'll become moredifficult to trade European corporate bonds after the enactment ofrules mandating price disclosures, while 41 percent think it'llbecome easier, according to a MarketAxess Holdings Inc. studyreleased yesterday.

Among larger European investors and dealers, “you see anxietyabout too much information, too soon, in either large trade sizesor less-liquid bonds,” Rick McVey, chief executive officer ofMarketAxess in New York, said in a telephone interview. At the sametime, he said, “keeping the market opaque and closed has impededthe growth of the European bond market.”

Bond Markets Booming

Regulators around the world are trying to illuminate obscuredmarkets as central banks rely on them more than ever as a means toimplement economic stimulus.

The Federal Reserve has bought trillions of dollars ofgovernment bonds and mortgage securities since the creditcrisis—purchases that are intended to boost economic growth bylowering borrowing costs for businesses and individuals. Companieshave sold record amounts of debt in response, seeking to lock inlow rates for years.

And European Central Bank (ECB) President Mario Draghi said last month that policy makers were “comfortable” takingmeasures to boost growth and inflation, including unconventionalsteps such as quantitative easing. Analysts expect him to unveil anew program as soon as tomorrow, when the ECB concludes a policymeeting.

For these reasons, credit markets are ballooning, making themever more important to the global economy. The volume ofEuropean-company bonds has swelled 33 percent since the beginningof 2008, while the U.S. corporate bond market has grown about 60percent in the period, to almost $10 trillion, according to ECB andSecurities Industry & Financial Markets Association data.

Most of the biggest investors and dealers say that while the newrules may not be the answer, they want more information about bondtrading in Europe. About 58 percent of them said there currentlyisn't enough transparency, according to the MarketAxess survey.

In the U.S., regulators are increasingly scrutinizingcorporate-debt markets, where trades still largely occur over thephone and through e-mails, as low interest rates prompt recordnumbers of investors to plow money into riskier bonds.

Meanwhile, the world's biggest bond dealers have cut staff andinventories in response to lower trading profits and risk-curbingrules, meaning that they play less of a role facilitatingexchanges. This has made it more important for investors to findalternative ways to buy and sell, and to glean accurate informationon their own about what prices they can feasibly attain.

In the year after the Trace bond-price reporting system wasintroduced in the U.S., a study found that $1 billion incommissions were wiped out. More information has been beneficial,though, because it has given investors confidence in the value oftheir purchases.

Whether big bond firms like it or not, debt markets are dramaticallytransforming as they become more and more important to the world'sgrowth engine.

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