The Economist explains: Why are most corporate bonds still traded on the phone?

  • Yet more than 80% of corporate bonds trading still happens over the phone.
  • Why does buying into the corporate bond market, a $50trn market globally, with $1.5trn in issuance last year in America alone, still require calling up a trading desk most of the time?
  • In fact, 90% of corporate bonds trade fewer than five times a year.
  • Even of the 20% of trading that is electronic, nearly all takes place on so-called “request-for-quote” platforms where dealers are still the only ones with the right to quote prices, and to buy or sell.
  • Some platforms, like MarketAxess, have set up “all-to-all” trading, which allows any participant on a network, such as an asset manager, to trade directly with any other one, bypassing dealers.

MANUAL trading has all but disappeared in much of finance. Most stock exchanges no longer have shouting floor traders; anyone from retail investors to the largest asset managers can buy and sell shares through easy, automated, electronic systems.

@JulieLerner: Should @panxchange launch a #bond trading platform? #fintech #BigData #blockchain

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The Economist explains: Why are most corporate bonds still traded on the phone?