Amadeusz Juskowiak

Government bond broker sees wider data access

The major US Government bond brokers are likely to give in to pressure from regulators and investors within the next 18 months making their directdealing screens available to many of those firms that are not now eligible to receive them said Richard Lacy Chairman of Exco International Inc

Earlier today Exco said it purchased an 80 pct interest in RMJ Holdings Corp one of the largest of the four bond brokers that dominate the business

In a telephone interview Lacy said Within 18 months we think the number of players will be expanded

Currently the four major brokers will sell their directdealing screens to only primary dealers in US Government securities or those that have applied to the Federal Reserve Bank of New york to become a primary dealer

The US Justice department is looking into whether limiting access to the screens to just a small group of dealers is a violation of US Antitrust laws

Primary dealers of which there are now 40 are an elite group of firms approved to buy Treasury securities directly from the Fed

But Lacy said that any agreement to expand access to the brokers directdealing screens is likely to be not as farreaching as some would like Instead of making screens available to any firm willing to pay for one he said it is more likely that a second tier will be established

He also said that RMJ is not willing to break away from the group of bond brokers and be the only firm to make its screens widely available to any one who wants them

Bond market sources had speculated that RMJ is better prepared to offer its services nationwide than its three major competitors

Lacy also said that he does not see any immediate pressure for a further cut in commissions paid on bond transactions any time soon In late 1985 transaction fees paid to brokers were cut in half to 39 dlrs per mln dlr transaction from 78 dlrs

Some US primary bond dealers have been suggesting that with further increases in transaction volume fees can be cut without hurting the brokers profits