The inevitability of consolidation
All the online bond trading platforms that are likely to emerge have already been announced. That already seems to be too many. One merger has already taken place and others will probably follow soon.
It took a while for the internet to have any significant impact on wholesale financial markets. While the rest of the global economy was busy diving into the dot com pool, the largest financial institutions, especially their fixed-income departments, were cooling their heels, not wanting to commit themselves too early to the so-called new economy.
But last year the leading bond market firms finally dived in. All the big players have stakes in a wide variety of platforms, seeking to ensure a presence as the winners and losers sort themselves out. In the fixed-income markets dozens of platforms have been launched in the past year, all promising to provide buy-side institutions and issuers with the benefits that electronic trading can bring.
It's becoming clear that not all will be able to survive in what is a highly competitive arena.
Broadly, the main platforms can be split into two groups: multiple-dealer sites aimed at providing buyers with a range of prices, usually in a limited array of products; and single-dealer, multi-product sites where one dealer offers access to many categories of instruments but with no price comparison.