The Surviving Bond Platforms See Volumes Surge

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Byline: Phillipa Leighton-Jones

Life looks good for bond trading platforms that survived a ruthless shakeout which led to the closure of many of their peers over the past two years.There are several reasons. First, volumes in the fixed-income markets have surged as disastrous stock markets repel investors and spell the end of the equities boom. The fact that the amount of bond trading has risen has had a corresponding positive effect on the fixed-income networks.

Greenwich Associates, the US-based consultancy, says the total volume of institutional fixed-income trading in Europe and the Middle East has jumped nearly 25% this year, to over $11 trillion ([euro]11 trillion).

The proportion of institutions trading government bonds online is up to just over 30%.

Peter D'Amario, a consultant at Greenwich Associates, says: "All fixed-income trading in Europe is up substantially." Total average volume is up 24%, with volume in governments up 34%.

Bond asset holdings have risen similarly - with total assets held up 28%, and governments up 32%. Trading has been robust not only in aggregate but also across specific products.

Second, pressure to cut costs has prompted a re-evaluation of electronic trading, which according to some estimates undercuts telephone trading by up to 50%. As dealers become more comfortable with screen trading and more liquidity moves to screens, trading bonds online becomes a much more …