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Everyone is Incentivised to Fix Corporate Bond Liquidity – Global Capital 

Author: \ December 1, 2017 \ 4 Comments
Full Article: Global Capital

A European Commission study has confirmed what every corporate bond market participant already knew was true – the market has a liquidity problem. Everyone is responsible, the EC says, but no one has any incentive to fix the problem. They need to pull together to improve liquidity while there is time. 

Comments
  • Jester
    JesterDecember 4, 2017"Is anybody else confused by the headlines on corporate bond liquidity. Major asset managers (see: Blackrock) used to complain that there was a massive problem, but then flipped to say everything was fine. US regulators (see: The Fed) have written passionately about how there is no corporate bond liquidity problem, but then turned on their own opinion to proclaim that there is a liquidity issue. Now comes the European Commission to proclaim what “every corporate bond m…"
  • Cougar
    CougarDecember 2, 2017"Liquidity benefited from a virtuous circle pre crisis but the regulators broke the market’s collective trust. It is encouraging the EC now recognises there is a significant bond market liquidity deterioration. There are flaws in the EC’s logic, which is as pity as it, in part, is responsible for the issues it now laments. Regulations implemented after the crisis have made it more difficult and less financially appealing for banks to attribute as much risk and investme…"
  • Slider
    SliderDecember 1, 2017"I hate this Slider name. Anyone else want to trade me? Tried and failed. I have come to the conclusion that people just don't get it and are trying to solve for something that cannot be solved. While increased connectivity helps on the margin, it is meaningless when it comes to a truly liquid market. The liquidity is what the liquidity is. It increases, it decreases, all depending on supply and demand. There are enough ways to bring buyers and sellers together but gue…"
  • Tried and failed.
    Tried and failed.December 1, 2017"Fragmentation is here to stay and in truth it should enrich the market by providing a wide range of protocols, workflows and functionalities. Equities manage to function perfectly well with fragmentation, why should Bonds be different? Apart from the obvious number of bonds versus low daily turnover argument that no one will ever solve, the solutions lie in more mundane origins. Connectivity, integration and data-normalisation. Take a moment to think what your phone d…"
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4 Comments on "Everyone is Incentivised to Fix Corporate Bond Liquidity – Global Capital "

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Tried and failed.
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Tried and failed.
Fragmentation is here to stay and in truth it should enrich the market by providing a wide range of protocols, workflows and functionalities. Equities manage to function perfectly well with fragmentation, why should Bonds be different? Apart from the obvious number of bonds versus low daily turnover argument that no one will ever solve, the solutions lie in more mundane origins. Connectivity, integration and data-normalisation. Take a moment to think what your phone does for you now and ask yourself what it is that has made that all possible. Once we are all connected, integrated and can consume all the… Read more »
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3 years ago
Slider
Member
Slider
I hate this Slider name. Anyone else want to trade me? Tried and failed. I have come to the conclusion that people just don’t get it and are trying to solve for something that cannot be solved. While increased connectivity helps on the margin, it is meaningless when it comes to a truly liquid market. The liquidity is what the liquidity is. It increases, it decreases, all depending on supply and demand. There are enough ways to bring buyers and sellers together but guess what, there aren’t buyers and sellers of the same thing on the same day, never mind… Read more »
Vote Up0Vote Down  Reply
3 years ago
Cougar
Member
Cougar
Liquidity benefited from a virtuous circle pre crisis but the regulators broke the market’s collective trust. It is encouraging the EC now recognises there is a significant bond market liquidity deterioration. There are flaws in the EC’s logic, which is as pity as it, in part, is responsible for the issues it now laments. Regulations implemented after the crisis have made it more difficult and less financially appealing for banks to attribute as much risk and investment in bond dealing franchises. As dealers sought to improve turnover in light of this they pandered to the buy side and offered all… Read more »
Vote Up0Vote Down  Reply
3 years ago
Jester
Member
Jester
Is anybody else confused by the headlines on corporate bond liquidity. Major asset managers (see: Blackrock) used to complain that there was a massive problem, but then flipped to say everything was fine. US regulators (see: The Fed) have written passionately about how there is no corporate bond liquidity problem, but then turned on their own opinion to proclaim that there is a liquidity issue. Now comes the European Commission to proclaim what “every corporate bond market participant already knew was true – the market has a liquidity problem.” Not so sure there is universal agreement on this. Now, what… Read more »
Vote Up0Vote Down  Reply
3 years ago
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