Electronic bond trading shows some stability

Electronic bond trading shows some stability

A Bond Market Association survey has found 81 electronic trading systems currently operating in the US and Europe versus 79 last year, indicating some stability in the electronic trading arena.

After several years of expansion and consolidation among fixed-income trading systems, the BMA's sixth annual survey finds platform operators focusing more attention on product enhancements. The Association expects some consolidation going forward as less efficient platforms exit the space or are absorbed into larger systems, the report notes.

Michael Decker, Association senior vice president, comments: "The past year has been a time for electronic trading platforms to focus on consolidating their market positions and enhancing their product offerings."

Of the 81 systems currently operating, 52 are based principally in the US and 28 in Europe. There are 11 names listed in the 2001 report that are not in this year's edition. However, 13 new names have been added to the survey this year.

Most electronic trading activity continues to be concentrated in the markets for commoditised, liquid products like government securities.

"Platforms which have thrived are those focused on enhancing the fixed-income marketplace rather than revolutionising it," notes the BMA. "Market participants are still focused away from exchange-like, anonymous, limit-order matching systems, except in the interdealer market...(where) the trend towards increasing reliance on electronic brokering has accelerated.

The report finds enhanced support for straight-through processing is becoming an increasingly important feature for trade execution systems.

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