Barclays fixed income SI traded more than major bond MTFs in 2019, ESMA report reveals  

Barclays Bank  SI  was  not only  the largest  SI  in 2019 but also the largest venue in the bond market, ESMA’s EU market securities report stated.

UK investment bank Barclays traded more volume via its fixed income systematic internaliser (SI) last year than any other major bond trading venue, according to a market report from the EU financial regulator.

The Barclays Bank bond SI was recognised as the largest venue in the European bond market  with €6.7 trillion annual trading volume  in 2019.

Bloomberg’s multilateral trading facility (MTF) was the second largest bond venue with annual trading volume totalling €4.7 trillion. Tradeweb and MarketAxess MTFs followed Bloomberg with €4.3 trillion and €3.5 annual traded respectively in 2019. 

Barclays was noted as the largest bond SI out of the 102 bond SIs in the European Economic Area (EEA) in 2019, accounting for 26% of SI volumes during the period. Barclays maintained a significant lead over BGC and SEB whose SIs were second and third largest in the bond market respectively. 

The figures were revealed in the first statistical report on EU securities markets from the European Securities and Markets Authority (ESMA), which provided an overview of the equity and bond trading landscape in 2019, including volumes and the largest venues.

“We are receiving this report with 11-month delay, the whole world changed due to COVID since then,” Vuk Magdelinic, CEO of fixed income analytics specialist Overbond, commented on the report. “While ESMA does underline significant illiquidity of the corporate bond market in Europe, this is a sustained problem that is predicated mostly in lack of consolidated data across-venues for price discovery.” 

ESMA’s report also revealed that the majority of bonds traded on the largest SIs in Europe, by a significant lead, were sovereign bonds. Sovereign bonds made up 51% of the total 19 million bond SI transactions traded on the market in 2019. 

Total bond trading volumes in the EEA reached € 101.1 trillion in 2019, with 77% of volumes from sovereign bonds and 18% from corporate bonds. Most bond trading took place off-exchange via over the counter and SIs, which accounted for 50% and 26% of all bond trading volumes in 2019. 

ESMA added that in 2019 the market was characterised by large trade sizes as average trade size for sovereign and corporate bonds was €8 million and €2.5 million respectively. 

“With the average transaction size on the fixed income side already at 2.5 million, ticket size is already high, but this means that 5 million+ trades are mostly done over-the-phone which limits data availability, data consolidation, and price discovery benefits,” added Magdelinic.

“Without a post-trade repository in Europe similar to FINRA TRACE in USD, the EU corporate bond market will need to focus on amalgamating OTC trading data flows with electronic venue data feeds in real-time in order to have a true view into market liquidity and price per bond.”