7 décembre 2021
BDF Paris
Séminaire Banque de France
Résumé
We examine technology enabling dispersed investors to directly trade with each other in over-thecounter markets. The largest electronic trading platform in corporate bonds started Open Trading (OT) to allow investor-to-investor trading. Over our 2014-2018 sample OT grew to win 12% of trades on the platform, with 2% being investor-to-investor trading, 3% being dealers trading with new clients, and 7% being new liquidity providers acting like dealers. This suggests that investors in corporate bonds prefer intermediation to direct trade. However, OT can enable new dealers to compete in liquidity provision. We use an auction model together with OT’s steady growth to measure OT’s effect on investors, dealers, and competition to provide liquidity.
Mots-clés
Over-the-counter markets, electronic trading, request for quote, open trading, corporate bonds, dealers;
Codes JEL
- G12: Asset Pricing • Trading Volume • Bond Interest Rates
- G14: Information and Market Efficiency • Event Studies • Insider Trading
- G19: Other