The Investment Management Association (IMA) is calling for an overhaul of the sterling corporate bond market, following the publication of its commissioned report, The Impact of the Credit Crunch on the Sterling Corporate Bond Market.

The association is calling for reforms to promote the well functioning market, with conclusions in the report stating that the buy-side of the sterling corporate bond market had been damaged by the credit crisis. The report is sceptical that the dealer market structure, which failed during the economic turmoil, may not recover its previous form, and that the absence of data for this market is a barrier to evidence-based policy making.

The IMA is championing changes to support the recovery of the sterling corporate bond market, including the Bank of England's further engagement with the market in the short-term, and that the Financial Services Authority (FSA) actively engage with liquidity providers, exchanges and MTFs. It also wants to see exchanges and MTFs consider whether they could play a further role in offering anonymised trading systems.

Jane Lowe, director of markets at IMA said: "The success of the sterling corporate bond market is important to the UK economy. It is no easy task to move from one market structure to another, but if the sterling corporate bond market is to survive and improve it will have to change. And while the dealer market has served investors well, going forward, there needs to be more choice in terms of trading functionality. Liquidity providers, regulators and market service providers all need to act together for this to happen."

The IMA said it intends to review these recommendations next year, and is looking to engage with all market players to promote reform.

The IMA's position paper and recommendations can be found here.

- Pensions Age May 2009

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