The coronavirus crisis has ushered in a “dramatic” shift in the world’s largest bond market away from traditional trading by phone towards electronic execution, according to a report produced by JPMorgan Chase.
The figures from the Wall Street bank, one of the biggest Treasury dealers, suggest that a gradual drift towards electronification of the market for US government bonds was accelerated by the impact of the pandemic as many of the bank’s clients — who found themselves suddenly working from home in a volatile market meltdown — preferred to transact based on prices quoted on a screen rather than picking up the phone to negotiate with a human trader.
Over the past two years, roughly 50 per cent of trading in the US Treasury market has been carried out electronically, according to the report by JPMorgan’s Treasury trading desk, seen by the Financial Times. That figure surged to 70 per cent in April and has continued to rise even as the most acute market stress eased, hitting 77 per cent in June. The data suggests that “the way these securities trade is starting to change dramatically”, the report said.