US Corporate Bond Trading Technology Update: The End of the Beginning

by Brad Bailey, August 19, 2015
Industry Trends
Global, North America

Abstract

In the trading of corporate bonds, there are forces driving change. We give an overview of these forces and assess how they are fundamentally driving a move toward increased electronic trading and increased automation in the multi-dealer to client space.

In the report US Corporate Bond Trading Technology Update: The End of the Beginning, Celent examines the forces at play and the innovation taking place in corporate bond trading.

The headwinds of increased regulation, stricter capital regimes, and regulatory-mandated shedding of businesses, all occurring within a volatility-dampened world, have produced tremendous pressures on the infrastructure of the corporate bond market. All this is happening against a backdrop of diverging forces, in respect to continued robust, record issuance, while secondary trading becomes more challenging.

“Forces are at play that could eventually cause a great deal of pain for the holders of corporate debt. The corporate bond market has evolved in a way where reliance on sell side liquidity provision has been paramount,” said Brad J. Bailey, Research Director at Celent. “While request-for-quote (RFQ), as a natural extension of existing workflows, remains a dominant protocol for trading corporate bonds, other trading protocols are being driven by players that find their ability to access liquidity at risk.”

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 subsidiary 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

Executive Summary

1

 

Key Research Questions

1

 

Key Findings

1

Introduction

2

Trading Platforms

8

 

Select Multi-Dealer Offerings

9

 

Electronic Trading

11

Technology Solutions

14

Conclusion

16

Leveraging Celent’s Expertise

17

 

Support for Financial Institutions

17

 

Support for Vendors

17

Related Celent Research

18

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