In the post-crisis period, increased regulation of financial intermediaries has led to a significant decline in corporate bond market liquidity. In order to stabilize these bond markets, policy makers recently proposed that the trading of corporate bonds should be more centralized. In this paper, we show that a centralization of corporate bond markets generally leads to an inferior outcome when compared with the initial over-the-counter structure. The reason is that in a frictionless centralized secondary bond market, the demand for bonds increases by such a magnitude that the return on bonds decreases until equaling the return on money, and hence, the market becomes redundant.