In a meeting held on July 29, 2019, the SEC's Fixed Income Market Structure Advisory Committee ("FIMSAC") unanimously approved its Corporate Bond Transparency Subcommittee's ("Subcommittee") preliminary recommendation regarding investor education concerning secondary market liquidity in the corporate bond market for retail notes ("Recommendation"). Mihir Worah, the Subcomittee chair, identified some characteristics that make retail notes attractive to retail investors, including the regular weekly issuances priced at par, yield enhancement features with embedded calls, and the survivor's option. However, he also pointed out the significantly higher turnover and transaction costs as concerns. The now-approved Recommendation underscores the significance of investor education regarding the liquidity, risks, rewards and objectives of fixed income products.
Originally published in REVERSEinquiries: Volume 2, Issue
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