Electronic platforms could save corporate bond
trading from a liquidity drought. But will they usurp
Paul Reynolds left his desk at Citi in 2012, after 25 years
trading bonds. The reason: trading in the traditional way,
where banks act as intermediaries for investors seeking to buy
or sell corporate bonds, was no longer profitable.
The financial crisis has changed a lot for fixed income
traders like Reynolds. Seven years after the collapse of Lehman
Brothers, Basel III and Dodd-Frank – the
trans-Atlantic pillars of the new regulatory order –
are changing the face of banking as we know it.
"Those regulations profoundly limit what a trader can do
within a bank," says Reynolds. "I stopped my job as a trader
because it would have been extremely difficult to make money in
quite the same way as I had been able to in the past."
That banks, in their quest to preserve...