Bonds and Regulation

Bonds and other fixedregulationbonds income instrumentsfixed income instrument are securitiesbond(s)regulation that are issued in the primary marketsprimary market(s) and are then publicly traded in the secondary fixed incomefixed income markets or are held in the private markets when they constitute private debtmarket(s)private debt. No matter what their form or the market they are traded in is, they are subject to a set of laws and regulationsregulation. The financial and debt crisis of the previous decade unveiled the importance of the applicable law and regulatory framework. Investors suddenly realized that a default is not unimaginable and that even a country – member state of the European Union could face it. The question of what are their rights when a company or a state cannot honor its obligations became pressing. The importance of the law under which a bond was issued emerged. Regulation both in the USA and in the European Union has been increasing the last years so as to set level playing field among investors, issuers and regulatory authorities and exchanges. Consequently, bond issuance and pricing may be affected in particular when it comes to corporate bonds, convertible bonds, covered bonds, as well as other fixed income instruments. In this chapter we try to present the regulation that applies to bonds and this is the added value to the reader.