U.S. Bonds Trading Up For Some Products, Down For Others
Fixed-income trading volume by U.S. institutions increased year-over-year in products such as syndicated loans, mortgage-backed securities, and short-term fixed income, while decreasing in commercial mortgage-backed securities, asset-backed securities and high-grade corporates, according to research by Greenwich Associates. Total cash bond trading volume totalled $7 trillion, while 75 per cent of that volume remains concentrated with the largest 10 per cent of institutions, according to the research. Commenting on the findings, Greenwich Associates consultant Tim Sangston noted: ‘It is a market undergoing significant change. This is in large part because of transparency issues, dealer reviews, feedback mechanisms, and natural asymmetries inherent to this business.’ The research went on to highlight that fixed-income investors use an average of 10 dealers across products, up from 8.5 a year ago, and concentrate 60 per cent of their volume with their top three dealers. About 25 per cent of investors conduct a formal review of their dealers, though this varies significantly by the size of the institution.