From the STA Conference in Washington, DC—Chris Concannon’s departure from Cboe Global Markets to join MarketAxess in January was viewed by many in the industry as another sign the speed and innovation prevalent in the stock market would start to bleed into bond trading.
Now, 10 months after taking on the role of president and chief operating officer at the largest electronic marketplace for US corporate bonds, Concannon has some ideas on where bond trading would benefit most from mimicking equities and where the two markets should remain separate.
Concannon, who spoke at an industry conference Thursday here, noted it won’t be an all-out sprint to completely mirror how stocks are traded.
“I walked in thinking — no offense to the equity people — we got it all wrong in equities. The regulations forced some of this stuff, and the less liquid end of the equity market got treated poorly.” Concannon said. “What is nice about the fixed-income market, it is going to be a patient walk to a more electronic market.”
One area bond investors should look at how stocks are traded is the concept of working an order, or putting a buy or sell order out into the market and handling it over time across multiple counterparties.
As it stands now, Concannon said, investors either work with one dealer to handle large, block orders or trade small tickets as quickly as possible to get them off their trading desk. “The concept of working orders still hasn’t reached the fixed-income market,” Concannon said. “I think there will be a lot of evolution around how clients can put some orders in the machine and work the larger, more complex orders.”
Innovations like that, or around how investors price bonds, are areas where the bond market can see big benefits from taking inspiration from how equities trade, Concannon said.
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