Beyond the Inflection Point: The Future of Credit Trading

01 December 2021

Over the past few years credit trading has changed fundamentally. Factors contributing to this change are regulation, new market participants, increased electronic protocols of execution, and most recently the COVID-19 pandemic. The pandemic has super-charged the market’s progression beyond the manual and laborious processes. It has rapidly accelerated new automated workflows and the adoption of electronic credit trading.

In Q3, 2021 WBR surveyed 100 Heads of Trading from asset management firms across Europe to find out more on the drivers changing the Fixed Income market. 

Key Insights include: 

Credit markets are approaching the inflection point of electronification
Electronic trading in European credit has increased dramatically over the last few years, with 45% of € investment-grade (IG) credit now executed electronically, reaching 75% on a ticket-count basis. 

Algorithmic trading in bonds is gaining traction
Our survey indicated that the rise in algorithmic trading has improved the credit market, with 54% of respondents stating it has had a positive impact on the execution of odd lots.

Portfolio trading is seeing significant growth in European markets
Most survey respondents see major benefits in portfolio trading (PT), most notably to save costs, save time and ensure certainty of execution.

New trading protocols on the rise
Investors are undoubtedly interested in using trading strategies and new trading protocols, such as auctions, matching platforms, firm prices, two-way pricing/request for market (RFM), PT, and central limit order books (CLOBs) via dealer pricing API protocols.

This exclusive report explores what they thought of credit market structure, the future of credit execution strategies, and PT.

Download PDF here.