30 March 2015

Citi bond deals raise doubts about future of electronic trading

10 August 2004  |  5851 views  |  0 Citygroup

MTS, the European electronic fixed income network, is contemplating the introduction of permanent caps on liquidity after a series of rapid-fire transactions by Citigroup last week exposed fault-lines in the market.

The government bond trading market was thrown into confusion last Tuesday as Citigroup pushed through a total of EUR11 billion in paper sales in two minutes over the MTS platform. As the value of futures contracts pegged to the bond market went into freefall and traders moved to cover their positions, Citigroup moved back into the market and bought back about EUR4 billion of the paper at cheaper prices.

In the immediate aftermath of the sale, MTS moved to impose temporary limits on the value and volume any one dealer can push through the system at a time.

The dealings have provoked doubts within the markets about the wisdom of moving more fixed income business to electronic platforms, where the size and speed of processing can have short-term knock-on effects to market-wide pricing and stability.

A group of primary dealers are understood to be meeting today to discuss the ramfications of last week's events, while MTS says it will reconsider the emergency restrictions at next month's board meeting.

Citigroup has declined to comment on the transactions.

Comments: (0)

Comment on this story (membership required)
Log in to receive notifications when someone posts a comment

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board, sign up now.

Related blogs

Create a blog about this story (membership required)

Related stories

09 June, 2004
21 May, 2004
18 February, 2004
03 February, 2004
25 November, 2002

Related company news

 

Who is commenting?

Top topics

Most viewed Most shared
Banking has reached a digital tipping poin...
10365 views comments | 56 tweets | 32 linkedin
Europe sets the pace as fintech investment...
5768 views comments | 29 tweets | 20 linkedin
Google preps Gmail bill payment feature
4846 views comments | 14 tweets | 12 linkedin
Future Money Focus: Mariano Belinky, Santa...
4827 views comments | 12 tweets | 12 linkedin
Barclays and PayPal join Government ID acc...
4694 views comments | 10 tweets | 11 linkedin

Featured job

to $175k base, double OTE, benefits
New York City, NY (USA)

Find your next job