The global fixed income market represents roughly $130 trillion in debt outstanding1, dwarfing the total market capitalisation for stocks. Over the past five years, fixed income markets have seen growth in electronic trading, however it has and will continue to evolve differently than electronic trading in equities due to the differing trading styles and the complexity of fixed income instruments.
To understand the current state of the electronic evolution in fixed income, our Market Structure team fielded a Global Client Fixed Income Markets Structure Survey, receiving responses from institutions including central banks, asset managers, insurance companies and hedge funds. The results indicate that electronic trading in fixed income markets may be gaining traction at long last, driven in part by increased data availability and new regulations.
“We've seen significant electronification, as well as adjustments in how firms trade fixed income securities over the last five years, but also observed a rapid acceleration over the last couple of years,” says Matthew Coupe, Director of Cross Asset Market Structure for the Global Markets business at Barclays. “As more firms migrate to electronic trading, the trend becomes self-perpetuating.”
The survey covered over 50 questions in the following areas:
- Trading tools and protocols
- Execution solutions and strategy
- Best execution and trader performance analysis
- Dealer selection
- Regulatory change
Here are four key takeaways from the survey.