“All-To-All” Corporate Bond Trading Goes Mainstream

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“All-To-All” Corporate Bond Trading Goes Mainstream

April 20, 2021 | Stamford, CT — Long held assumptions about how corporate bond markets operate have changed as investors and dealers are increasingly comfortable trading anonymously with best execution the ultimately goal.

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Q1 2021 hedge fund letters, conferences and more

In all-to-all (or A2A) markets – where all market participants are able to trade with one another regardless of firm type - asset managers are providing liquidity to dealers and each other, inter-dealer trading is increasing, and nonbank liquidity providers are growing in importance.

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These A2A platforms, which were a revolutionary concept a decade ago, are growing fast. Coalition Greenwich estimates that A2A trading accounted for 12% of investment-grade corporate bond trading volume in 2020, a huge jump from the 8% recorded only a year before in 2019.

“The absolute numbers only tell part of the story,” says Kevin McPartland, Head of Research in the Coalition Greenwich Market Structure and Technology group and author of All-to-All Trading Takes Hold in Corporate Bonds. “Whereas A2A trading was previously available on only a handful of platforms and retail-focused central limit order books (CLOBs), today most of the major platforms have A2A activity on the board.”

Investors Value A2A Liquidity and Execution Quality

Market participants view this growth as a positive factor for markets. Approximately 85% of the corporate bond investors participating in a recent Coalition Greenwich study believe there is value in the buy side providing liquidity.

As markets evolve, participants are quickly getting over past concerns about the identity of their counterparties. In 2019, 23% of research participants felt the counterparty to an electronic trading “mattered a lot.” In 2020 that share dropped to just 14%.

“Relationships still do matter,” says Kevin McPartland, “but execution quality should matter more.”

Greenwich Report Dissects A2A Trading

The new Greenwich Report analyzes the growth in A2A trading by breaking down the sources of liquidity on A2A platforms (including the banks), discussing the impact of A2A trading on price improvement, and examining the broader role A2A is playing in the evolution of fixed-income markets.


About Coalition Greenwich

We are the leading global provider of data, analytics and insights to the financial services industry.  We specialize in providing unique high value data and actionable information to help our clients improve their business results. The firm's data and analytics provide a clear, actionable picture of businesses and markets and are valued by boards, strategy teams and top management at leading financial services institutions.

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About CRISIL

CRISIL is a leading, agile and innovative global analytics company driven by its mission of making markets function better. It is India’s foremost provider of ratings, data, research, analytics and solutions with a strong track record of growth, culture of innovation, and global footprint. It has delivered independent opinions, actionable insights, and efficient solutions to over 100,000 customers through businesses that operate from India, the U.S., the UK, Argentina, Poland, China, Hong Kong and Singapore.  It is majority owned by S&P Global Inc., a leading provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide. For more information, visit www.crisil.com

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Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver

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