Editor’s letter

The rehabilitation in all things technological – as far as the bond markets are concerned – and the improvement in corporate bond liquidity are providing a welcome boost to the area of electronic bond trading. Electronic trading from corporate bonds first emerged in the mid-1990s and rapidly failed to live up to many of the industry’s promises. One key problem was that providers failed to take account of the nuances of the corporate bond market – illiquidity and fragmentation.

As a result many platforms assumed that the market would be willing and able to jump from a relationship-led, over-the-counter market to one of exchange trading within short period of time. Combined with collapses in technology spending by financial institutions and the liquidity crisis that rocked the US and European bond markets in 2002, many trading platforms retreated back to the government bond markets or threw in the towel altogether.

However after a year of improving liquidity, trading platforms are returning, to a large extent chastened and less complacent. At the same time a number of the largest banks in credit have been pushing their own electronic trading platforms in an attempt to reap the benefits of greater efficiency and speed that electronic trading offers.

Perhaps after the false dawn of the 1990s, 2004 will finally bring the reality of electronic trading to corporate bonds.