Mexican investors benefit from a centralized electronic bond trading marketplace

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With a record $70.6 billion traded in 2019, Mexico is the largest emerging market traded on the MarketAxess electronic bond trading platform. Owing to the connectivity of an extensive network of global investors, onshore clients, and dealers; the local community in Mexico can request bond prices for MBONOS, MCETS, and MUDIS from 15 dealers within seconds. Due to the broad liquidity access and unique trading protocols, platform trading volume from clients based in Mexico on MarketAxess has grown +336% YOY versus Q1’2019.

Mexican Peso denominated debt volume on the platform grew 26% in 2019; we expect a similar growth rate in 2020. Drawing a comparison to the 336% growth rate from our Mexican customers. The question is what is driving the focus on electronic bond trading in Mexico?

What is driving the change? 

While local regulators are encouraging investors to adopt electronic trading, investors and dealers are experiencing first-hand the efficiency benefits MarketAxess can offer. Firstly, we provide clients the ability to request competitive prices from an unlimited number of dealers within seconds. This Request-for-Quote (RFQ) process mimics trading via the phone – an investor calls multiple dealers requesting a price and then executes at the best price. This manual process can take a significant amount of time to complete and is limited to a narrower group of counterparties due to its laborious manual nature. MarketAxess broadens the liquidity pool and improves the efficiency to trade bonds more quickly on a competitive trading landscape. More recently, we’ve expanded our technology beyond the RFQ to a unique set of features that can only be leveraged on MarketAxess. 

Our two-way price request protocol, Request-For-Market (RFM), takes the RFQ to the next level and is the fastest-growing protocol amongst the client base in Mexico with RFM volume growth at 421% in Q1’2020 year over year. In a time of challenging market conditions, those who have adopted e-trading have taken the immediate next step to familiarize themselves with RFM. The benefit of RFM to the client is that the side e.g. buy or sell is not communicated to the dealer community, no information is provided to anyone but the winner while the trade is in flight or post-trade. As this protocol prevents information leakage, clients have the ability to trade block orders of $100-200mn at mid-price. A highly efficient tool to transfer risk, leaving no market footprint for the dealer to work out of risk. 30% of all MXN denominated bonds are traded via the RFM protocol, replacing what is traditionally transacted on the telephone. 

Open Trading™ | Client becomes dealer

Open Trading, our all-to-all marketplace, has reshaped global credit markets and will continue to shape the market in Mexico. Today, 41% of all USD-denominated Mexican bond volume is executed anonymously via Open Trading, enabling an investor to request an anonymous price from any of the 1,700 participant firms on our platform. This price can be from a dealer, asset manager, central bank, or pension fund. We saw a 40% increase in investor liquidity provision during the crisis, for example, asset managers in Mexico City have provided liquidity to asset managers in the UK. 


By connecting participants anonymously, the access to liquidity grows exponentially versus traditional, bi-lateral workflows. This level of connectivity thus drives significant cost savings for investors and is driving the growth in usage in Mexico. Observing specifically USD denominated debt in Mexican names, clients on average save $0.25 when executing trades through our Open Trading network, versus the next best dealer. In more recent times of volatility, this cost-saving increased to $0.85 as more clients engaged in the all-to-all marketplace. Open Trading for peso-denominated instruments is slated to be launched later this year.