The billion-dollar electronic trade

At the end of March, a client, unannounced to the market, ran an Investment Grade buy program on the platform, trading approximately $1.6bn over the course of five days. That wasn’t a one off—several weeks ago, another client executed a similar program, this time in High Yield. We ran some analysis to understand execution at this scale: 96% of those trades were in round lots and blocks!

As more clients adopt electronic trading, we are starting to see the execution of larger trades on our platform. Using our disclosed dealer pool in combination with Open Trading®, our all-to-all environment, clients are seeing 4.5bps of price improvement across trades of all sizes¹. Open Trading delivers demonstratable price improvements to the over 1,700 clients who participate in Open Trading, accounting for $2.6bn+ in transaction price improvement². In March 2023 alone, IG trades between $1mm and $5mm had an average price improvement of 6.5bps.

We also looked at these big trades another way. CP+™ is the MarketAxess AI-powered bond pricing algorithm that covers the global credit and rates markets. In the High Yield buy program, close to 25% of the volume traded through the CP+ Mid. In March 2023, 26.4% of Investment Grade blocks greater than $5mm executed at Mid or better. It’s interesting to note that a lot of that execution was for long duration trades of 10+ years. We’re not only seeing trade sizes increasing, but we’re also witnessing longer credit trades occur.

Platform-wide % of US IG and US HY trades executed through CP+ Mid for March 2023 by size bucket

The data speaks for itself—11% of blocks on the MarketAxess platform are now traded anonymously via Open Trading³. In March 2023 volumes, that was $23.4bn in March or 12.2% market share of TRACE for Investment Grade. Our block sized trades are increasingly in-line with TRACE blocks where the average trade size greater than $5mm stands at $11.3mm. Comparatively, MarketAxess blocks greater than $5mm are $10.45mm on average, while blocks greater than $10mm stand at $16.5mm on average.

Electronic trading helps investors with large client flows and/or big portfolio shifts. When you think about it, this would take substantially longer to execute via phone— it could take weeks, and you end up with no proof of best execution!

Now that we’ve seen these large trades on our platform, we know what to expect. The High Yield trade was a watershed moment for electronic trading. It’s something we’ve known that our platform can handle, and we only expect to see more as people turn to electronic trading for round lots and blocks.

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¹As of March 2023, when the IG buy program occurred.
²This is the total number of price improvement since inception.
³As of March 2023.