Bond Connect is an electronic fixed income trading
system managed by Advanced Auctions, a State Street
The IOI feature is well known in equity markets where it is used to generate multi-party trading interest. Bond Connect said it adapted it for the fixed income markets where “the complexity and sheer number of outstanding issues constrains the volume of trade.”
According to the Bond Traders Association, there are about 28 electronic fixed income trading systems operating today, accounting for some 10% of all US fixed income trading. Estimates from the second quarter 1999 indicated that about 2% to 5% of corporate and Treasury fixed income trading is now done electronically on a daily basis.
Bond Connect, launched June 2000, offers two types of IOI’s, both real-time:
- public IOI’s are security-specific IOI’s that alert users of contra-interest
- generic IOI’s enable users to advertise interest in sectors or security types with certain characteristics.
This last feature eliminates the need to restrict the
trading universe to specific securities when multiple bonds
may be attractive depending on contra interest.
Another system enhancement is an automatic recycling feature that applies to both orders and IOI’s. This allows a user to specify the time in force of an order (e.g., Good ’til Next, Good ’til Filled), eliminating the need to recycle unfilled orders from one auction to the next throughout the trading day.