10 Price concessions, in turn, lower traditional measures of trading costs, making trading seem inexpensive, when in reality these concessions are fees the dealers pay to some investors for providing liquidity. Moreover, as dealer inventories have declined over the past few years, this downward distortion to aggregate trading cost measures may have increased.
To address this problem, Choi and Huh try to isolate transactions in which corporate bond investors are looking for liquidity (in other words, are looking to trade) and then construct measures of transaction costs for only such trades. The paper’s results are preliminary but appear to suggest transaction costs have increased somewhat in recent years. 10  See Choi and Huh (2016). -62.