Canada's first investment-grade index using blended prices could improve liquidity in the country's bond market due to increased transparency. Bid/ask margins could tighten or volumes could increase, according to Peter Martin, managing director of financial market research for CIBC World Markets in Toronto. It is one of the first dealers involved with the index. He declined to speculate on how much the new index might improve liquidity.
Standard & Poor's, CIBC andRBC Capital Markets recently said they would launch a blended high-grade index this quarter.
Martin added the index may pique investor interest from south of the border because it provides a greater degree of security for investors who are not familiar with all the nuances of the Canadian market. He declined to speculate on how much volume could increase.