Fixed Income Meets the Black Box

摘要

The universe of fixed income securities — with more than 3 million names in the U.S. alone — dwarfs the global equities market, which only has about 15,000 stocks from which to choose. As the dot-com bust has consolidated more than 100 bond-trading platforms to just a few entities with meaningful liquidity, the fixed income market would seem to be ripe for algorithmic trading, and in the fast-moving, deeply liquid interdealer market in government bonds, this certainly is the case. But it may be quite some time before algorithmic trading becomes commonplace for institutional asset managers and mutual fund managers, due to structural issues with the dealer-to-customer marketplace that result in a lack of transparency and navigability for automated trading patterns.