MarketAxess, the operator of a trading platform for US and European corporate bonds, reported a 31% increase in its global trading volume for 2011, showing a greater appetite among investors for electronic bond trading.
In 2011, MarketAxess traded US$525 billion, up from US$402 billion the previous year. This compared to an overall increase in trading of high-grade corporate bonds to US$2.92 trillion in 2011, up from US$2.89 trillion in 2010.
However, trading of corporate bonds suffered a 6.6% year-on-year decline in Q4 to US$617 billion due to adverse market conditions.
Overall market figures presented by MarketAxess came from the Financial Industry and Regulatory Authority’s Trade Reporting and Compliance Engine (TRACE).
According to MarketAxess, cost savings for clients trading electronically increased by 22% to 6.7 basis points in Q4, compared to the same period the previous year. The firm calculates cost savings by comparing trade prices on its platform with the weighted average spread of comparable trades in the same bond reported to TRACE.
In line with the more challenging trading environment towards the end of the year, MarketAxess said institutional investors broadened their use of counterparties, with new dealers – i.e. those that have been on the system since 2008 – accounting for almost 21.4% of volume on the system in Q4, compared to 17.5% in Q4 2010.
“The market data confirms many of the trends we observed at MarketAxess throughout the year,” said Kevin McPherson, head of US sales at MarketAxess. “The MarketAxess trading platform demonstrated its usefulness to investors seeking efficient and transparent access to alternative sources of liquidity from a greater number of counterparties during challenging market conditions.”
MarketAxess’ platform allows institutional investors to request quotes from multiple broker-dealers simultaneously and execute with the broker of their choice.