@article {Cici126, author = {Gjergji Cici and Scott Gibson and Yalin G{\"u}nd{\"u}z and John J. Merrick, Jr}, title = {Market Transparency and the Marking Precision of Bond Mutual Fund Managers}, volume = {41}, number = {2}, pages = {126--137}, year = {2015}, doi = {10.3905/jpm.2015.41.2.126}, publisher = {Institutional Investor Journals Umbrella}, abstract = {The validity of the price marks placed on bonds for valuation purposes is important for a diverse group of stakeholders, including investors, mutual fund managers, dealers, pricing services, and financial regulators. The authors analyze the dispersion of month-end price marks simultaneously placed on identical corporate bonds by different U.S. mutual fund managers, before and after TRACE dissemination and issuer introductions into Markit{\textquoteright}s Credit Default Swap spread database. The authors find large and statistically significant decreases in newly disseminated bonds around key TRACE system rollout events. Dispersion for large, investment-grade bonds fell 20\% to 83\% after the start of TRACE reporting. They also find evidence of spillover effects for non-disseminated bonds. During the pre-TRACE period, some evidence that mark dispersion fell for investment-grade issuers after introductions into Markit{\textquoteright}s database is reported. The results provide support for the idea that the TRACE transparency initiative reduced information inequality within the market{\textquoteright}s institutional side. The original NASD concern about people {\textquotedblleft}operating largely in the dark{\textquotedblright} effectively applied to professional fund managers.TOPICS: Mutual fund performance, exchanges/markets/clearinghouses, in markets}, issn = {0095-4918}, URL = {https://jpm.pm-research.com/content/41/2/126}, eprint = {https://jpm.pm-research.com/content/41/2/126.full.pdf}, journal = {The Journal of Portfolio Management} }