Bond Algos Tap into ETF Liquidity and Efficiency Gains

Bond Algos Tap into ETF Liquidity and Efficiency Gains

Algorithmic trading has picked up steam in the corporate bond market as fixed income trading desks appear to follow the playbook of equities. But skeptics contend this is unlikely, arguing that bond desks are quite different and will undergo their own electronic transformation.


One of the world’s largest fund managers has developed a pre-programmed system that executes buy-and sell orders with minimal handling by its traders, according to a speaker at Tabb Group’s “Survival of the Fittest” fixed income conference in February.

With a goal of “zero to low-touch trading” the asset manager follows pre-set rules and instructions to execute each order.

Corporate bond algos allow the buy side to respond to thousands of prices –request for quotes (RFQs)– sent by the brokers and then automatically execute on certain parameters.

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