Bank’s Liquidity Lobbying is Self Serving – FT
June 17, 2015 \ 4 Comments
Central banks and the International Monetary Fund have been worrying about falling liquidity for more than a year. Banks have come up with a neat explanation, and a fix: market making has been cut back because of tighter bank rules, so the obvious answer is to relax regulations. FULL ARTICLE
The Real Reason Why There is No Bond Market Liquidity Left – ZeroHedge
There is a broad-based problem insofar as the investor base across markets has developed a greater tendency to crowd into the same trades, to be the same way round at the same time. This “herding” effect leads to markets which trend strongly, often with low day-to-day volatility, but are prone to air pockets, and ultimately to abrupt corrections. Etrading if anything reinforces this tendency, by creating the illusion of liquidity which evaporates under stress.
Dear Buy-side. You seem very concerned about liquidity. Can I suggest paying for it? – Bull Market
There’s no law of the universe which says that a higher capital requirement for inventories should mean that banks stop wanting to be in the business of bond trading. What ought to happen is that, if the capital requirement is higher, pricing should go up, in order to cover the cost of the larger capital requirement.
The Simple Reason Why Everyone Wants New Corporate Bonds – Bloomberg
Citigroup credit strategist Jason Shoup estimates that investors can add 20 basis points of alpha, as measured by annual excess returns, to their portfolios just by purchasing new-issue bonds. In a world of low and even negative interest rates, that is a not insignificant opportunity and it’s one that investors have been eager to take advantage of in recent years.
Financial Economists Roundtable – Statement on the Structure of Trading in Bond Markets
The Financial Economists Roundtable believes that an order display requirement in the fixed income markets would substantially improve market quality for retail and institutional investors alike. FER urges the U.S. Securities and Exchange Commission (SEC) to improve bond market efficiency by simply requiring brokers to post their customers’ limit orders to an electronically accessible broker platform or alternative trading system, where one customer’s limit order could trade against another customer’s order without dealer intermediation.
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BCG Report – Adapting to Digital Advances: Global Capital Markets 2015
Digital innovation is allowing new value propositions to emerge in sales and trading.
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Bankers and Regulators Voice Fears on Bond Market Volatility
(DealB%k – Peter Eavis)
Those voicing such fears say that recent changes in the bond market could change the way that Wall Street banks, large bond funds and trading systems would behave in a period of turbulence. Other developments have left the market vulnerable, they say. A huge rally in bond prices over the last several years, stoked by vast amounts of monetary stimulus by central banks, may have made the market vulnerable to a sharp sell-off.
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