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  • Writer's pictureJohn Shelburne

TRACE Volume and Electronic Trading Trends for February 2023

High Grade Volume Has Had A Rollercoaster Ride While High Yield Volumes Steadily Rises

See all of the visuals for corporate volumes (table of volumes at the bottom with a download link)

In the last four months, the fixed income market has experienced some interesting trends and the data for March should be riviting.

Both high-grade and high-yield volumes for TRACE (Trade Reporting and Compliance Engine) eligible bonds have shown growth, while electronic trading platforms MarketAxess and Tradeweb have also exhibited increases in trading volumes.

From October 2022 to February 2023, TRACE high-grade volume rose from 561,302 to 635,510, reflecting a steady increase in trading activity. TRACE high-yield volume followed a similar trajectory, growing from 190,733 to 226,640 in the same period.

During these months, electronic trading platforms MarketAxess and Tradeweb saw growth in trading volumes across both high-grade and high-yield bonds. MarketAxess high-grade volume increased from 110,978 in October 2022 to 127,843 in February 2023, while its high-yield volume grew from 40,076 to 43,502.

Similarly, Tradeweb experienced growth in both its fully electronic and electronically processed combined trading volumes. High-grade volumes rose from 137,275 to 142,245, and high-yield volumes increased from 20,293 to 22,606.

Percentage of electronic trading volume in the fixed income market

To calculate the percentage of electronic trading volume, we'll look at the combined trading volumes of MarketAxess and Tradeweb and compare them to the total TRACE trading volumes. We'll focus on the most recent month of data available, February 2023.

High-Grade Bonds:

  • Electronic Trading Volume (MarketAxess + Tradeweb): 127,843 + 142,245 = 270,088

  • TRACE Volume: 635,510

  • Percentage of Electronic Trading Volume: (270,088 / 635,510) * 100 = 42.5%

High-Yield Bonds:

  • Electronic Trading Volume (MarketAxess + Tradeweb): 43,502 + 22,606 = 66,108

  • TRACE Volume: 226,640

  • Percentage of Electronic Trading Volume: (66,108 / 226,640) * 100 = 29.2%

As of February 2023, electronic trading accounted for 42.5% of high-grade bond trading volume and 29.2% of high-yield bond trading volume. This demonstrates the growing importance of electronic platforms in the fixed income market, as they facilitate faster and more efficient transactions.

Will the March volumes show more electronic trading?

I am guessing YES but the question remains at how many algos were turned off after the SIVB failure. Should be interesting figures next month.



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