The growth of electronic bond-trading may reduce liquidity during times of market stress, according to the Bank for International Settlements.
“While there has been an improvement in certain metrics, liquidity may have become more fragile during stress episodes,” the BIS said in a Jan. 21 report about the shift from telephone trading to centralized, electronic markets. “More sophisticated measures need to be used to capture the multiple dimensions of market quality.”
Liquidity Concerns.
The report adds to concerns about liquidity in debt markets, as tighter capital regulations deter dealers from holding bonds to facilitate transactions. It also focused on high-frequency ...
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