Single-dealer e-trading platforms bounce back after Dodd-Frank urges automation
Electronic trading volumes of credit through single-dealer platforms struggled to recover following their financial crisis-induced slump. But demands from US and European regulators for best execution are leading to an increase in volumes once more and the creation of new platforms.
Prior to the global financial crisis, the future for electronic trading of credit instruments looked positive. Clients were using e-trading platforms to trade increasingly complex deals. But this came to an abrupt halt as bid-offer spreads widened due to increased risk and poor liquidity. Clients pushing for an accommodating price appeared to turn away from their monitors and hit the phones; volumes quickly dived.
“The credit side of e-trading virtually stopped functioning from 2007 to 2008 as
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