NEW YORK, Sept 10 (Reuters) - Goldman Sachs ( GS ) is

urging U.S. regulators to allow large banks that sell corporate

bonds on behalf of investors to delay public reporting of the

largest trades of such bonds, according to an internal white

paper published by the bank.

In the paper, which was reviewed by Reuters, Goldman is

arguing that current disclosure requirements set by Wall Street

regulators force large liquidity providers to disclose sensitive

details of a transaction before dealers can manage the risk

resulting from large portfolio trades, which can potentially

move markets.

Portfolio trading allows investors to move large baskets of

bonds in a single transaction.

Under current rules set by the Financial Industry Regulatory

Authority (FINRA), banks are required to disclose secondary

trades of investment grade and high-yield bonds within 15

minutes of such transactions being executed, irrespective of the

size of the trades.

The Wall Street bank is arguing that reporting of portfolio

trades larger than $250 million in value should be exempt from

the standard 15-minute public distribution rule.

Instead, Goldman is recommending that bond trades ranging

between $250 million and $500 million should be disclosed by the

end of a given trading day, and those above $500 million should

be settled over a day, or over the T+1 settlement schedule, and

by the end of that day. All single-bond transactions and

portfolio trades up to $250 million would continue to be

disclosed within 15 minutes, Goldman said.

Goldman estimates the suggested changes for trades above

$250 million would touch roughly 0.5% of all portfolio trades,

as the vast majority of corporate bonds are less than $250

million in size.

Large Wall Street liquidity providers have for years

complained that current reporting rules hamper their ability to

hedge risk on large bonds.

"When numerous market participants are aware of a potential

block portfolio trade, liquidity providers will factor

information leakage and market signaling into their quotes,

limiting the price improvement that can be offered to end

investors," Goldman said in the paper.

Goldman's latest proposal comes as the structure of the U.S.

corporate bond market has been transformed over the years

through electronic trading, increased disclosure requirements,

and the rise of the corporate bond exchange-traded fund (ETF)

market.

Electronic trading currently accounts for more than 50% of

U.S. investment grade volumes, while bond ETF volumes average

$10.4 billion a day, according to Goldman estimates.

Portfolio trading was launched in 2018 to make trading of

corporate bonds more efficient for investors who wanted to trade

a collection of individual corporate bonds in one sweep with a

single dealer.

Experts say portfolio trading has reshaped the market for

relatively less liquid corporate bonds because they are clubbed

together with more popular bonds.

The bank, in its paper, said that the framework for FINRA's

current reporting requirements, which are known as Trade

Reporting and Compliance Engine (TRACE), was put in place in

2002 when the size of the largest corporate bonds was much

smaller.

"Markets would be well served with a fresh look at whether

it is appropriately calibrated for the markets of today,"

Goldman said.

Any changes to bond trading reporting rules would require a

sign-off from the FINRA and also the U.S. Securities and

Exchange Commission. Goldman declined to comment on whether the

bank has already lobbied regulators to implement these proposed

changes.