Nearly half of US investment grade corporate bond trading was electronic in 2024 – and this is only the start, Coalition Greenwich says.
In the year ahead, the firm predicted that the increased use of electronic trading will outpace bond market growth. The increased use of electronic trading has driven activity, taking 44% of overall volume in 2024. While IG led the way, HG remained static year-on-year with a third of the market.
“Regardless of next year’s path, it’s safe to say the corporate bond market is now an electronic one,” Coalition Greenwich stated..
Overall, US corporate bond average daily notional volume rose for the third year running, hitting US$46 billion in 2024 – a 21% increase year-on-year. Overall, The average daily trade count in US corporate bond trading rose by 17% YoY to 125,723, and the average trade size expanded 5% to US$381 thousand. Not only is issuance rising, but secondary market trading is spiking, Coalition Greenwich said. Between 2021 and 2024, turnover rose from 0.33% to 0.44% of bonds outstanding traded daily.
Currently, MarketAxess leads the way in US corporate bond e-trading, taking 37% of the market share. Tradeweb follows close behind with 34%, while Trumid and Bloomberg compete with 13% and 11% respectively.
Rising e-trading volumes are the result of strong supply and demand, Coalition Greenwich explained, with a hungry market met by new trading venue solutions. E-portfolio trading was especially popular this year, making up approximately 85% of total portfolio trading and recording US$3.3 billion in ADNV. This marks a 76% YoY increase, surpassing the growth of the most popular execution methods: disclosed RFQ, the volumes for which rose by 14%, and anonymous RFQ, which was up 10%.
In this space, Tradeweb takes more than two thirds of executed volume – but as its popularity grows, Trumid and MarketAxess are increasing their market share. As of 2024, both firms took 13% of the pie.
However, voice trading is far from dead. Only 20% of dealer revenue for US IG corporate bond trading was captured through electronic channels, despite 48% of activity being conducted electronically. For high yield corporate bonds, this balance was 10% to 33%.
One impact of stronger electronic liquidity and portfolio trading access has been a reduction in ETF use, Coalition Greenwich said, noting that ADNV for corporate bond ETFs diminished for the second year in 2024 – down 7% YoY to US$7,679. The growing success of alternative solutions has allowed institutional managers to adjust risk through the bond market rather than via ETFs.
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