Bringing voices together to promote well functioning markets
Every Friday, we send you an email of top articles related to corporate bond market development. The newsletter is a free service.

Credit Suisse, Bank of America, Credit Agricole Fined by EU for Bond-Trading Cartel – WSJ

Full Article: WSJ

The EU’s executive arm said Wednesday that traders at the banks worked together on trading strategies, exchanged sensitive price information and coordinated prices for sovereign bonds denominated in dollars.

“The cartel harmed the financial markets,” said Margrethe Vestager, executive vice president of the European Commission. She said the trading restricted competition when fund managers bought and sold bonds on behalf of investors and retirees. 

Customer Connectivity: What Do Corporate Bond Customers Really Want? – Stifel

Full Article: Stifel

In an effort to refine Stifel’s distribution strategy, we recently solicited feedback from customers about their electronic preferences for delivery of our liquidity pool (pre-trade data) and how they are interacting with the street in an increasingly digital-based financial landscape.

Our outreach included inquiries about customers’ order and execution management systems (OMS and EMS) and connectivity preferences. In all, we gathered more than 500 responses from institutions of all sizes and sophistication levels in Investment Grade, High Yield and Emerging Markets.

Gary Gensler is Confirmed as SEC Chairman by Senate – WSJ

Full Article: Wall Street Journal

Senators voted 53-45 to approve Mr. Gensler’s nomination, making him the most prominent financial regulator that President Biden has hired to date. He received support from three Republicans, reflecting the GOP’s limited appetite for a policy agenda that is expected to include requiring more disclosure from public companies on matters such as the potential impact of climate change on their businesses.

Tapping the Network Effect to Unearth Bond Liquidity – Greenwich

Full Article: Greenwich

While big-dealer dominance used to come from their large balance sheets, which allowed them to take principal risk, their dominance now is based much more on the network of clients they’ve created over time, and their ability to connect opposing interests among them. In other words, they know where the bonds are buried.

The Fed Officially Joins Bank of Japan in Liquidity Trap – Nikkei Asia

Full Article:

The Fed, of course, had long since joined the Bank of Japan down the quantitative easing rabbit hole. That was in the aftermath of the 2008 global crisis, seven years after the BOJ pioneered QE. Last week, though, came the admission from Powell many of us knew was inevitable: America is officially trapped below zero with the BOJ, and indefinitely so.

Stars Align for Improving Pre-Trade Transparency – Bond Buyer

Full Article: Bond Buyer

“Between Gary Gensler and the existing commissioners’ backgrounds and the current market events, issues related to market structure and market integrity are going to be at the forefront of their minds,” Mirko said. “In terms of the application to the fixed income area, that is also where pre-trade transparency would have some interest.”

The Anatomy of Bond ETF Arbitrage – BIS Report 

Full Article: BIS Report

This article explains and analyses a crucial but understudied aspect of ETF arbitrage that distinguishes equity ETFs from bond ETFs: the nature of ETF baskets. Whereas for equity ETFs baskets are usually almost identical to holdings, for bond ETFs they are systematically different and include a small share of the bonds in the actual holdings, eg less than 3% for the largest bond ETF. For bond ETFs, baskets also change significantly from day to day and creation baskets tend to have longer duration and higher liquidity than redemption baskets.