[ I N D E P T H | B U Y - S I D E P R I C E M A K I N G ]
The changing role of the buy-side in fixed income price making
The current macroeconomic backdrop has left many fixed income buy-side traders wanting when it comes to sourcing liquidity using the traditional methods . Increasingly fragmented liquidity paired with dwindling volatility and divergent rate hikes globally have discouraged the already shrinking number of traditional liquidity providers from offering up balance sheet , particularly in size . In this environment , those still willing to make prices are choosier with who they will trade with and are likely to charge a wider bid offer spread .
This departure from the traditional sell-side - Credit Suisse became the latest to exit in
As the liquidity landscape increasingly turns buyside firms to the role of price maker in fixed income , ANNABEL SMITH explores the current technology available to them to do so and the role data will play in giving the buy-side the confidence to cement this trend as mainstream .
March - has paved the way for new liquidity shaping trends in fixed income . Non-traditional liquidity providers such as Flow Traders , Jane Street , Optiver , and Citadel Securities have made waves in fixed income and all-to-all platforms provided by the likes of MarketAxess , Tradeweb and Bloomberg have exacerbated this – offering buy-siders a chance to face off against firms they might not otherwise have been connected with .
The proliferation of exchange traded funds ( ETFs )
12 // TheTRADE // Q3 2023