From a trader’s perspective this ought to mean new services can appear on their desktops without any fuss or bother, where connecting them once might have been slower and more difficult. It also offers another possibility. By employing the connectivity between different systems as operational ‘hops’, trading desks 

Some of the biggest banks that serve as corporate bond dealers, including Bank of America Merrill Lynch, Citigroup, Goldman Sachs, JPMorgan, and Morgan Stanley, are actively working with their clients to help facilitate direct electronic trading.

Fixed-income hedge funds had $556 billion in assets under management, about six percent of the $9.2 trillion corporate bond market. “Given their relatively small size, it is simply impossible for hedge funds to ‘become the market’ and absorb large liquidity shocks,” according to the report.

Extracting the benefits of transparency while eliminating its detrimental effects requires techniques that are normally reserved for electronic trading platforms. To get the best out of transparency, we need protocols. Applied properly, the right transparency protocols will increase access to information while protecting the proprietary data that can destabilize a market.

Finra last week proposed running a pilot program that would give traders 48 hours before having to reveal their so-called block trades to other investors. The effort would allow the industry-funded brokerage regulator, which is overseen by the U.S. Securities and Exchange Commission, to evaluate how delayed transparency might affect corporate bond trading.

Consider Germany’s Bayer AG, which agreed to buy Monsanto in May 2016 for $66bn in what was then the largest all-cash merger ever announced. The deal was controversial from the start as Bayer was going to need to raise billions. Traditionally, this means going on a roadshow and explaining its plan in great detail. Without evidence of a credible plan, capitalists will not part with their money.

Not the ECB. 

For more than a decade, corporate-bond traders resisted efforts to carry out more transactions electronically even as most other corners of financial markets embraced the move to computerized buying and selling. But that’s slowly been changing as new rules have forced dealers to act more like machines, linking up buyers and sellers in almost real time as an exchange would, instead of buying securities from investors and hanging onto them.

The tech leader in this space right now handles 95% of all electronic bond deals. But that is still less than 20% of all bond trades made today.

Citigroup and JPMorgan Chase have closed down desks dedicated to handing smaller orders as Wall Street continues to cut costs on trading floors. The two banks have shuttered their odd-lot trading desks in recent months and started executing such trades electronically instead, according to people with knowledge of the
matter. 

We’re not the first firm to sound an alarm bell over liquidity in the fixed-income credit markets. Indeed, that bell has been ringing non-stop since the since the collapse of Lehman Brothers. The risk has only grown in recent years as regulations pushed market makers out of the business, in spite of record growth in the size of the corporate bond market.