Remarks to the Fixed Income Market Structure Advisory Committee

Good morning. I want to welcome everyone to the inaugural meeting of our new Fixed Income Market Structure Advisory Committee.

The fixed income markets are vitally important to our financial system. They allow corporations to raise money to expand and grow their businesses and they allow savers to invest so they can fund their retirements, pay for children’s educations, and achieve other financial goals.

The fixed income markets have served us well for many years. However, these markets are now in a period of profound and multi-faceted change. Fixed income trading is moving from voice-based to electronic trading. New players have an increasing role in the fixed income markets at the same time that banks have reduced their holdings. The market itself is also much larger. In 2016, there was $8.1 trillion in corporate bonds outstanding, up from $5.9 trillion in 2010. These changes have resulted in a multitude of follow-on impacts. Spreads are tighter, trade sizes are smaller, and liquidity is increasingly concentrated in certain bonds.

There has been a great deal of debate about what these changes mean, particularly as they relate to liquidity—the subject of today’s discussion. As such, the diversity of viewpoints that all of you bring to this discussion is incredibly valuable to us. We, as a Commission, need to hear from a variety of stakeholders. Therefore, I would like to thank the Committee members and panelists for taking the time out of your busy schedules to be here with us today. I look forward to the discussion.

Thank you.