e-Bond Trading in the US: What Goes Up Must Come Down?

August 30, 2002

Abstract

Boston, MA, USA August 30, 2002

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2001 was a very tough year for the once high-flying e-bond trading platforms. The hype surrounding the enormous potential of electronic fixed income trading platforms was replaced by pessimism as many wondered, "Who will fold next?" Still, Celent is optimistic about the future of electronic fixed income trading and we expect to see approximately 60 percent of all fixed income trading occurring through the electronic medium by 2007.

In a new report entitled e-Bond Trading in the US: What Goes Up, Must Come Down, Celent examines the reality of the electronic fixed income market and features platforms that have successfully survived the turbulent market shake-out.

Despite the market contraction, enormous potential still remains within the electronic fixed income market. Demands for better price transparency and market data have increased over the past few years, which bodes well for the future of these platforms. The US Treasuries market aside, other less liquid markets are still up for grabs and we expect increased competition amongst the remaining players vying for market share.

According to

Sang Lee, analyst at Celent, "We believe that in the end, the market shake-out of 2001 was actually a very positive thing for the electronic fixed income marketplace. There were too many players and pretenders at that time. Now, however, the market has become more realistic and rational." He adds, "The clear winners in the client-to-dealer space have been TradeWeb, MarketAxess, and TheMuniCenter. However, they should be concerned about potential competition from highly liquid inter-dealer platforms such as eSpeed, BrokerTec, and MTS, should they decide to open up their platforms directly to the buy-side." A is available online.

of Celent Communications' Institutional Securities & Investments research service can download the report electronically by clicking on the icon to the left.

        

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Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

 

Boston, MA, USA August 30, 2002

e-Bond Trading in the US: What Goes  Up Must Come Down?

Return to report Abstract

 

EXECUTIVE SUMMARY 3
INTRODUCTION 4
MARKET OVERVIEW 5
  Market Penetration 8
  Industry-Wide Contraction 9
  Factors Behind Consolidation 10
  Fixed Income and FIX 12
  Attractive Market Potential 14
PLATFORMS LEFT STANDING 16
  BrokerTec 16
  eSpeed 18
  MarketAxess 20
  MTS 23
  TheMuniCenter 27
  TradeWeb 28
PLATFORM COMPARISONS 31
FUTURE TRENDS 36

 

        

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