Bond fund managers living without liquidity

Bond fund managers are learning to live without predictable liquidity in secondary markets. The problem is not new: last summer, AsianInvestor highlighted the growing concerns about regulation and risk-based capital rules’ impact on banks’ broker-dealers. Increased costs of capital have prompted banks to pare back inventory as well as shutter proprietary trading desks. Lately, concerns about secondary markets have risen alongside the likelihood of the US Federal Reserve increasi…