BDA Calls on Fed to Include All Banks and Dealers Who Provide Liquidity in Emergency Programs – Bond Dealers of America
June 5, 2020 \
0 Comments
Full Article: Bond Dealers of America
These new programs rely on pre-2008 assumptions about market structure. The biggest financial players have a much smaller footprint in the markets than they once did, and the 24 Primary Dealers with whom the Fed currently trades make up a much smaller share of the trading market. The pulse of the financial markets now extends beyond the old Wall Street stalwarts
Comments
The Corona Virus is Exposing Wall Street’s Reckless Gamble on Bad Debt – New Yorker
Carney compared what was happening in the corporate-debt markets to the subprime-mortgage boom that culminated in the great financial crisis of 2008 and 2009. Citing the rise of “covenant lite” loans that placed very few restrictions on corporate borrowers, Carney said, “The subprime analogy isn’t perfect, but it’s on the road to ‘no doc’ underwriting, which happened eleven years ago.”
Comments
Corporate Bond Liquidity During the COVID-19 Crisis – Federal Reserve Bank of Philadelphia
In this note, we calculate several measures of liquidity to shed light on trading conditions in one large and important market: the market for corporate bonds. As uncertainty surrounding downgrades and potential defaults grew during the first weeks of March, and withdrawals from corporate bond funds mounted, we find that dealers became increasingly unwilling to absorb inventory onto their balance sheets.
Comments
Current List of SMCCF Eligible Sellers – NY Fed
List of corporate bond market makers that are eligible to trade with the Secondary Market Corporate Credit Facility.
Comments
Don’t Fight the Fed – ETF.com
What would be interesting to see is the execution of this Fed action be a catalyst to finally drag corporate bond trading out of the “relationship age” and into the “information age.”
Comments
The Fed and BlackRock’s Bond-Buying Criteria Challenged – The Desk
Three main questions around execution have been raised by market participants to The DESK: Who will manage the broker list? How will execution quality be judged? How will conflicts of interest be avoided by BlackRock’s Financial Markets Advisory team, when it might buy assets including BlackRock ETFs, or assets it has a view on for investment purposes?
Comments
Lawsuit Claims 10 Big Banks Rigged Market for ‘Odd-Lot’ US Corporate Bonds – Reuters
Ten of the world’s largest banks, including JPMorgan Chase and Bank of America, have been sued for allegedly conspiring over nearly 14 years to rig prices in the $9.6 trillion U.S. corporate bond market, costing ordinary investors billions of dollars.
Comments
Credit Quants Get Schooled After Liquidity Storm Upends Trading – Bloomberg
Trading froze when transaction costs rocketed. In some cases, humans had to step in. The bread and butter of their algorithms — corporate data — turned stale in the fastest economic shock in living memory.
Comments
The Fed’s Intervention is Widening the Gap Between Market Haves and Have-Nots – Wall St Journal
The handful of markets in which the Fed has directly intervened by purchasing assets or lending against them have recouped some of their losses since then, a reassuring sign for investors who were taken aback by the indiscriminate selling that occurred throughout much of March.
But in riskier markets that fall outside of the Fed’s purview—including junk bonds, leveraged loans and nongovernment-backed mortgage bonds—the pain has been slower to abate. Some markets remain essentially closed for business, setting off a race against the clock for borrowers to stay afloat.
Comments
Open Trading Liquidity Provision in Stressed Markets – MarketAxess
Disclosed dealers provide the vast majority of liquidity in global corporate bond markets. Under difficult market conditions, though, a Request-for-Quote (RFQ) might receive few or perhaps no responses from disclosed dealers. There are any number of reasons for this including risk limits, shift to manual trading and/or potentially reduced efficiency as employees and traders are working remotely.
Comments
©2016 - Friday Newsletter. All Rights Reserved.