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Tepid Growth in 2013 Pushes E-Trading to 25% of Global Fixed-Income Volume

  • MarketAxess, Bloomberg and Tradeweb Dominate Globally
  • New Entrant Market Share Remains Limited

Electronic trading systems increased their share of global fixed-income trading volume only slightly in 2013, bringing the proportion of total volume executed electronically to 25%.

A new report from Greenwich Associates, Global Trends and Competitive Analysis of Multi-Dealer Platforms, reveals that 45% of institutional investors execute at least some portion of their fixed-income trading volume through electronic channels. According to the report, which is based on Greenwich Associates research among 4,000 institutional investors globally, last year’s moderate increases represent a continuation of the slow, long-term growth of electronic trading. 

That growth was not uniform across products and regions, however. “Institutional e-trading of investment-grade corporate bonds showed limited growth in 2013, with some regions posting declines,” says Greenwich Associates consultant James Borger.  “This stagnation is expected to continue in 2014.”

The electronic trading of government bonds experienced growth in 2013 with the U.S. leading the charge.  Globally, 55% of government bond investors now trade 35% of total notional volume through electronic systems and strong growth is expected throughout 2014 as interest rates continue to rise.

Top Platforms Dominate

The report identifies electronic trading leaders and laggards, showing total penetration and volume weighted market share in each region across investment-grade corporate bonds, high-yield corporate bonds and government bonds.  Despite the arrival of new entrants into the marketplace, top e-trading platform players continue to dominate. 

MarketAxess continues to lead corporate bond e-trading in the U.S. with Tradeweb leading in U.S. treasury trading.  Bloomberg has the largest market share across the board in Europe and Asia.

Future Growth

Greenwich Associates expects fixed-income e-trading growth to continue at a slow pace in coming months, with U.S. corporate bond markets showing limited growth, European credit markets growing steadily and U.S. treasury markets growing more quickly. “While the imminent rise in rates globally is expected to drive investment dollars away from bonds, this secular shift could increase volatility and volume, ultimately boosting e-trading usage across the board,” says Kevin McPartland, head of Greenwich Associates Market Structure & Technology.