For a bank, ultra transparency would be ongoing disclosure of its current asset, liability and off-balance sheet exposure details.
For a structured finance security, ultra transparency is disclosure of current collateral performance information on an observable event basis. Where an observable event includes a payment, delinquency, default or modification.
The impact of ultra transparency on proprietary trading would be that the ability to make money would decline as other market participants could a) copy the trade or b) trade against the position.
Hedge funds [and proprietary traders] hate transparency, and they have to declare their book to the regulator. Not to the level of the positions they are taking, but on profit and loss (P&L). This gives the rest of the market a sense of what the hedge fund is doing.The impact of ultra transparence on structured finance would be to make it impossible to profit from opacity and put the financial system at risk.
Would I consider moving a particular market in secret to be illegal or immoral? Let me tell you what I think is illegal: what the banks have been doing with their structured products, asset-backed securities and collaterised debt obligations (CDO) and the whole sub-prime mortgage business. These guys must have known the risks, they must have seen that the complexity of these products was so high that in the event of a sudden crisis nobody would be able to understand them. They conned the rating agencies.