Citadel Securities is conducting a third of its Treasury risk by voice, according to a representative. Kevin McPartland, head of research, market structure and technology at Coalition Greenwich, explains to The DESK why this figure is not as surprising as it might seem.
Earlier this year, Will Boeckman, head of fixed income platform sales at Citadel Securities, stated during a panel at FILS USA that the firm was “still doing a third of our Treasury risk voice, whether it’s manual booking or post-process trade. That’s a pretty significant number for a tech-forward firm,” he added.
Significant, perhaps, but not exclusive to Citadel. A recent report from Coalition Greenwich noted that electronic trading levels have hovered at around 60-70% of market share for the year to date, with 2023’s full-year levels averaging at 64%. With this in mind, Boeckman’s figure is well within the average. However, it raises questions about whether there is a ceiling for e-trading – and whether markets have already hit it.
“The short answer is yes,” says McPartland. “Even in US equity markets, which are hyper-electronic, institutional investors executed 44% of their volume via a sales trader in 2023. The dynamic in the Treasury market is similar.”
Clients tend to prefer executing large block trades over the phone, he comments, “and dealers encourage clients to call if they have a particularly tricky, large or sensitive order rather than do it electronically”.
Elsewhere in fixed income, research from Coalition Greenwich on corporate bond block trading found that 58% of survey participants viewed over-the-phone communication with bank dealers as the block order trading method providing the best outcome.
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