WASHINGTON — Market participants worried yesterday that the Obama administration’s plan to limit the size and certain trading activities of banks could adversely affect firms’ tender option bond programs, which provide money market funds with safe municipal investments.

They also expressed concern that the plan, which includes the elimination of bank proprietary trading, could remove an important but opportunistic buyer of large bond deals that have lower ratings and higher yields. Specifically, proprietary desks have “played an important role” in supporting the transportation and health care sectors, one market participant said.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.