Electronic trading in U.S. corporate bonds is finally taking off. But it’s still early days, says this investor

It has been about two decades in the making, but electronic trading in corporate bonds finally has made notable inroads in a market long known for its privacy and low-tech ways.

In terms of scope, the massive U.S. corporate bond market has no immediate rival. Last year, an average $35.7 billion of bonds traded each day, according to Coalition Greenwich, or slightly more than Vermont’s annual gross domestic product. That’s up from a 39% share in Europe in 2017, but a jump from 19% for U.S. investment grade and 11% of U.S. high yield for the same time frame.

“Most trading in Europe, on the other hand, is done via traditional RFQs to five dealers,” wrote Kevin McPartland, Coalition’s head of research for market structure and technology, calling it a “protocol that makes it hard for the buy side to express interest without showing their hand.” To that end, Wyatt pointed to a notable uptick during the pandemic of big, block lists circulated by brokers of portfolios containing as many as 300 different line items, offered frequently on an all-or-none basis, which is a way dealers can corner that market and trade entire lists at once.

Do they go straight to Fed reserve member banks?

Buy $DRV don't pay rent or mortgage say act of God clause sue me like your insurance company

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