Celent Report on Electronic Trading in US Corporate Bonds

[CAF Note: I suspect the recent meltdown by Bill Gross related more to his fears of managing the world’s largest bond fund in a world of diminishing dealer and institutional liquidity than personnel issues. Let’s see how the shift to electronic networks works. This is going to be very interesting. Most dangerous job in the world may be managing bond and derivative databases.]

by Peter Cotton

Here are some statistics from the recent Celent report on US Corporate bond trading.

As of January 2013, holdings of corporate bond inventories at the 21 dealers that trade with the Federal Reserve have declined by 74% to $56.4 billion since the 2007 peak.
Only 30 bonds a day have more than five trades on either side in institutional size with names changing all the time due to new issues, according to MarketAxess.
According to ITB, since 2009 odd lots/super-odd lots notional (US$100K–$1M) have seen an increase in daily notional volume of 33%.
There has been only a modest increase in ADV (up 6%) for trade size US$1M–$25M since 2009.
Average trade size on RFQ platforms (i.e., MarketAxess) has been declining 5–6% per year.
Average trade size on MarketAxess high grade is now ~$400K.
In the US, corporate bonds volumes compiled with TRACE data are only slightly up year on year at just under $12 billion of average daily volume, and it has been rather stable for the past four years.