The Securities Industry and Financial Markets Association (SIFMA) today announced the results of its Third Annual European Fixed Income e-Trading Survey. Despite the credit crisis, market participants reported an increase in fixed income e-trading volumes in 2007 with 53 percent of buy-side respondents reporting that they were trading more than 60 percent of their fixed income volumes electronically. This is compared to only 38 percent of respondents saying they traded above the same level in 2006.
Despite the bullish predictions by respondents in the 2006 survey, volume increase on the sell side was not as high as projected. Sell side respondents reported 34 percent electronic fixed income volume trading in 2007 versus 31 percent in 2006.
The survey conducted during December 2007 and January 2008 canvassed 147 buy-side investors, 15 sell-side firms around the world and five trading platforms.
Other important trends which emerged from the survey are that an overwhelming majority of buy-side respondents (85 percent) expect to be using a single platform for all of their institution’s wholesale electronic trading activity within the next two years. The leading factors for the buy side in determining whether to trade a product electronically were streaming prices and market volatility. A key reason for choosing which platform to trade with by the buy side was depth of liquidity. Distinct from 2006’s responses where the most important factors affecting choice of platform cited were price transparency and best execution.
Mark Austen, managing director of SIFMA affiliate, the European Primary Dealers Association said, “Surprisingly, the credit crisis seems to have had a minimal impact on e-trading fixed income volumes, although expectations of etrading growth are not as robust for 2008 as in previous years. The survey also underscores mixed signals between buy side and sell side where the buy side is expecting to trade from a single platform within a two-year time frame but still does not rate a “range of products” as a key factor in their choice of where to trade from.”
The results of the survey will be a focal point of SIFMA etrading conference which starts tomorrow in London at Old Billingsgate. SIFMA will release the equities portion of their survey on Wednesday.
View full survey results at http://www.sifma.org/Conferences/2007/ETrade2008/E-trade08/Concise_SIFMA_eTrading_Fixed_Income_Survey.pdf
