In 2024, there has been a significant milestone in trading for corporate, municipal, and agency bonds, as recorded by a leading financial institution. The trading volume has surged, marked by an impressive increase in notional trading values across various bond categories.
Corporate bond trading reached a historic notional volume of $212 billion, reflecting a substantial 40% jump compared to the previous year. Similarly, municipal bond trading also saw a record, achieving a notional volume of $178 billion, which represents a 5% increase from 2023. Additionally, bonds related to government-sponsored enterprises and federal agencies, collectively referred to as agency bonds, exhibited notable performance with a notional trading volume of $28 billion, marking a 20% rise from the year before.
The robust growth in trading volumes can be attributed to the effective utilization of advanced trading protocols and a widening network of participants. The adoption of a specific trading mechanism known as the Risk Matching Auction (RMA), which operates as a session-based protocol, has particularly boosted corporate bond trading. In the fourth quarter of 2024 alone, RMA volumes escalated by an impressive 100% from the previous quarter, and have quadrupled since the same quarter in 2023. The auction sessions are well-attended, featuring participation from 50 registered firms and over 400 users, demonstrating strong market engagement.
To further support trading efficiency, various protocols are offered that notably include click-to-trade, sweeps, auctions, and RFQ (Request for Quote), catering to a wide array of fixed income data. The marketplace prioritizes execution efficiency, providing the flexibility of both anonymous and disclosed counterparties. This enables transactions across a spectrum of sizes, from odd-lots to block trades.
The continued expansion of the participant network—which includes a blend of retail-oriented brokerage firms and institutional investors—has played a crucial role in the escalation of trading activities. Efforts to enhance execution workflows and broaden access for diverse market participants have yielded positive results, translating to record transactional activity throughout the trading year.
Overall, the bond market’s performance in 2024 underscores the positive growth trajectory, driven by innovation in trading technologies and a commitment to enhancing liquidity and efficiency across various types of bond instruments.