CMSA – The drive to change industry dialogue in corporate bond markets

Dan Barnes
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To create a wider dialogue around industry change, the Credit Market Structure Alliance (CMSA) is building an event with a democratic agenda.

The DESK: Why is the Credit Market Structure Alliance (CMSA) forming?

Chris White: The Credit Market Structure Alliance is gathering decision makers and thought leaders from across credit markets to really elevate the level of discussion around where credit markets need to go, to function optimally. This needs to be a more inclusive discussion, not just led by incumbent vendors or the largest buy side. It must include the sell side and all tiers of buy side accounts in the conversation. We hosted the inaugural event in October of 2019, and it was a great success. Just like the first CMSA,  we have removed cost and administrative barriers by making the event invite-only, with no per-person ticket charge.

TD: How do you characterise the problems that might have existed in representation to date?

CW: The traditional conference structure tends to really favour very few institutions because there are extremely high costs for vendors and dealers, so there are a limited number of voices discussing the future of the market. Over the past 10 years, this approach has created a repetitive conversation, lacking a diversity of topics, and diversity of opinion.  A more inclusive approach is needed to help predict where credit markets are going and to focus the conversation on high-priority topics that are currently facing market participants. A critical differentiating factor between the CMSA and traditional conferences is that we have an open-discussion format for the agenda topics. Think British parliamentary debate instead of the usual panel structure. This went incredibly well in our first event because you heard from market participants that don’t normally get a voice.

TD: What are examples of issues which may have either been skewed in their discussion or missed?

CW: Electronic trading has been overly weighted in the discussions on the future of credit markets. At this point in the traditional narrative, some believe that unless we start trading everything electronically credit markets are not progressing. Meanwhile, there have been major advancements in desktop technology, advancements in data, advancements in voice technology that don’t seem to be recognised as being evidence of positive progression. In addition it’s not clear that electronic trading solves all of the issues that this market faces, especially when it comes to things like institutional liquidity.

TD: We recently saw the SEC’s proposals about expanding Reg ATS and Reg SCI widely criticised for pushing everything towards the regulated model designed for exchanges; is there a danger the market is forced into a structure to which it does not fit?

CW: The difficulty that credit markets have in adopting proposed regulation is indicative of our lack of dialogue. Regulators have made attempts to gather the industry to foster communication, but many people are guarded in those discussions because everything is on the record and statements can be easily taken out of context. As a result, discussions hosted by regulators tend to be extremely formal with limited back and forth. Unfortunately, this can create distance between what market participants feel is needed, and the types of rules getting proposed. For example, I don’t think that anybody in the market feels that there needs to be further regulation around RFQs. I haven’t met a person who says that. Yet, recent regulatory proposals seem focused on this topic. We have invited the regulators into the Credit Market Structure Alliance so they will be able to hear both formally and organically what market participants are experiencing. Finally, to foster candour and openness, the Credit Market Structure Alliance is closed to the media.

TD: How are you building an agenda?

CW: A critical difference between the Credit Market Structure Alliance and other conferences, is that we give direct control of the agenda to market participants, instead of sponsors. We’ve launched a survey with six topics that can be voted on by individuals. These topics were selected based on what’s been most popular on the FridayNewsletter, my weekly email that aggregates key content on credit market structure. Based on the early results, we are already building one panel on the impact of alternative market makers.

TD: Is there an expectation that participants can expect a call to action as a result of participating in the event?

CW: The action starts with open dialogue, by hearing from representatives of the broader market I am hopeful that organically we as an industry can start to take responsibility for moving certain key discussions forward. The Credit Market Structure Alliance is specifically designed to efficiently gathering decision makers and thought leaders across all of the different areas of the market in a way less focussed on commercialising the gathering, and more on making it high quality and effective.

TD: In this year’s Trading Intentions Survey we have seen that the buy side views dealers and alternative liquidity as more important than ever as contributors to liquidity; how will you ensure broad representation at the event?

CW: The CMSA is a collaborative event that gives participating sponsors the opportunity to invite individuals they think would be additive to the event. This way, ViableMkts does not soley dictate who can attend. Another format feature is the ability for sponsors to host smaller, private learning sessions during the networking portions of the conference. This creates a diversity of topics without compromising the main room agenda. Finally, a free, well-catered conference at a beautiful location in NYC feel like the right ingredients to attract a network of people across the buy side, sell side and the regulatory community.

You can expect to take in input from lots of different market participants to help you form a more holistic of view what is actually going on, what the true priorities are and what are working solutions.

TD: How can someone request an invite to the Credit Market Structure Alliance?
CW: We’ve been promoting the event on LinkedIn and have sent out emails, but if either of those have missed you, feel free to send a request to cmsa@viablemkts.com

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