Australia's capital markets lack balance, particularly in regards to debt funding for mid-market businesses and mid-cap listed corporates, according to Mark Paton, chief executive of FIIG, the country's largest fixed-income broker. He says our banks have not been active in this part of the sector so the way should be open for non-bank specialists to move in."Companies that don't have a credit rating should be able to access the corporate bond market," Paton said, adding that opening the bond market to retail investors should be central to any strategy."At the moment, it's a bit of an exclusive club, with 99 per cent of bonds in the Australian market held by institutional investors," he said. "We think healthy public investor participation is a big part of the solution to making corporate bond issuance more mainstream, when it comes to funding companies in this country. "It's a nonsense to say the bond market is too complicated for ordinary investors to understand. Supposedly, they can understand the equity risk but can't understand the debt risk. A bond is a very simple instrument and has to be safer than equity, so from a structural perspective why are we excluding retail investors?"Paton also took a swipe at "competing forces in the broader financial services sector" who suggest that there is no market or that a new market needs to be established."ASIC, the ASX and others seem fixated on the listed environment as being the only solution," he said.Indeed, the Reserve Bank deputy governor Philip Lowe told delegates at the Australian Securities and Investments Commission annual forum that the important issue for policy makers was ensuring the infrastructure supporting the bond market remained in place and was strengthened over time. Lowe said this strengthening had occurred, through the simplification of prospectus requirements, improved market transparency and the listing of securities on the Australian Securities Exchange."Regulators, government, market participants, investors and issuers would be better served by focusing on growing the existing market rather than trying to start a new one," Paton said.And comments like those in the Business Council of Australia's submission to the Financial System Inquiry, which asserted that "we have a very thin government bond market and infant corporate bond market", leave Paton shaking his head."The truth is, Australia already has a bond market with over A$1 trillion of bonds under issuance, comprised of Commonwealth government securities, semi-government securities, corporate bond issuance asset-backed securities, RMBS and CMBS issues. These are pure debt securities, excluding hybrids."This market does exist. It turns over $4 billion a week, so it's deeply liquid. Like every other bond market in the world most investors have to go through a broker to access it."And, as a self-confessed "supporter and fan of banks", Paton said his approach is not to impinge on the banking relationship. "Banks are good at financing working capital, backing transactional work like mergers and acquisitions and providing short-term finance.""The two capabilities - bond financing and bank debt - should be working in unison, and banks needn't be