Electronic trading infrastructure is growing in the European corporate bond market, but e-trading rates have stayed static from 2023 onwards, according to a recent Coalition Greenwich report.
Increased geopolitical and economic uncertainty pushed up average daily trading volumes in European corporate bonds, rising 18% year-on-year (YoY) in 2024 to €12.1 billion. According to research from Coalition Greenwich, this trajectory will continue in 2025 – 44% of investors polled expected volumes to keep rising. Banks, particularly, are expecting to increase their trading volumes over the year.
To meet these rising volumes, electronic trading protocols and platforms are being adopted along with automation and portfolio trading. In 2024, 85% of investment grade (IG) investors and 79% of high yield (HY) investors traded elements of their volume electronically, the Coalition Greenwich survey found. However, just 63% of IG and 44% of HY notional volumes actually traded electronically last year – remaining unmoved from 2023’s figures. Looking further back, HY’s e-trading proportion fell from 49% in 2022 and IG rose only 1% in the last two years.
Traders are still unlikely to execute large orders electronically, with almost half (49%) of those polled stating that chat or instant message executions bore the best outcomes for block trades. A further 33% favoured over-the-phone execution.
“Creating mechanisms for block trading is the next frontier for trading venues in Europe. The market should not think of that push as an attempt to disintermediate the dealers, but instead as an effort to digitise a process that requires finding the right liquidity providers to speak with and then communicating market colour and alternatives to the proposed trade if prices for that bond don’t match a portfolio manager’s expectations.”
The use of disclosed request-for-quote (RFQ) was expected by 70% of those polled to increase in 2025. All-to-all trading use is also expected to increase in IG trading, according to the survey. Less than a third of those surveyed expect the use of auctions or central limit order book protocols to increase.
A combination of strong 2023 results and reduced market volatility in 2024 caused the reduction in corporate bond revenues last year, Coalition Greenwich suggested. Together, IG and HY revenues fell 8% to €1.6 billion.
The majority of e-traded corporate bonds go through Bloomberg in Europe, the platform taking 56% of the market share in 2024. MarketAxess held close to a quarter (24%), while Tradeweb took 19% of the pie. Coalition Greenwich highlights MarketAxess’s planned product suite expansion for the year ahead, including block trading tools and portfolio trading services, as areas of growth.
©Markets Media Europe 2025
