Electronic trading of bonds in Europe is set to grow by nearly two fifths. This is one of the most striking findings of the second survey of electronic fixed income trading in Europe by the Securities Industry and Financial Markets Association (SIFMA).
The survey found that sell-side, buy-side and trading platforms expect e-trading, as a percentage of volumes, to grow by as much as 38% in 2007. This follows the sell-side reporting a 32% growth in volumes of e-trading as a percentage of the total from 2005 to 2006.
In addition to the leading sell-side firms and trading platforms, more than 302 buy-side firms with assets under management of €23.5 trillion participated in the SIFM survey this year, which remains the only one of its kind for the fixed income markets in Europe.
“The increase in buy-side participation has helped create what should now be regarded as the definitive benchmark overview of all the major participants in the European fixed income e-trading marketplace,” says Mark Austen, Executive Director at SIFMA. “Electronic trading is becoming the dominant method for an increasing number of firms. By the end of the year, less than one percent of the buy-side surveyed will not trade electronically.”
The survey also found that, while awareness of MiFID among buy-side respondents has improved (66% said “they weren’t aware” of MiFID last year),
42% of respondents said they were not aware of MiFID in this year’s survey.
“This could be deemed a concern, as traders will need to implement much of MiFID, including best execution policies,” says SIFMA in a statement.