BlackRock’s (BLK) recent ending of its pilot buy-side market in U.S. corporate bonds on its Aladdin Trading Network (ATN) was all over the news last week. After apparently just one year, BlackRock decided in favor of deep integration with MarketAxess’ (MKTX) electronic market in U.S. corporates. Much was made of the missing electronic piece of the U.S. corporates puzzle (with estimates ranging from 10% to 20%) and diminished sell-side broker-dealer inventory related to TRACE reporting transparency (i.e., leading to reduced profits).
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As well as the potential advice gap leaving millions without access to financial advisors, another of the great fears expressed in the run up to the implementation of the U.K. Financial Services Authority’s (FSA's) Retail Distribution Review (RDR) was that a large portion of the financial advisory community would be forced to exit the market, unable or unwilling to match up to the new weight of regulatory expectation. In the face of some wild exaggerations, even the FSA put out an estimate that the RDR would lead to 6,000 advisers leaving the sector. That was an underestimation.