Dealer and Investor Talks Over Liquidity Fears

Reuters/Chip East

Financial Times – June 1, 2012                    By Nicole Bullock, Tom Braithwaite and Dan McCrum

The largest Wall Street securities dealers held talks with institutional investors in Boston last week to discuss concerns over shrinking liquidity in the corporate bond market and the rise of electronic trading.

People who attended said the unusual summit involved asset manager Fidelity and banks including Goldman Sachs, Deutsche Bank, State Street, Barclays, Credit Suisse, Citigroup, Morgan Stanley, Bank of America, JPMorgan Chase and UBS. The banks either declined to comment or could not be reached.

Since the financial crisis, large Wall Street securities dealers have sharply cut their holdings of corporate bonds, a situation market participants say is aggravated by concerns over the euro zone crisis and the impending Volcker rule, which places restrictions on dealer inventories.

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