Well for starters, my much talked about LBO of Holky’s Mostly is now off the table! 😦

But what does the “Credit Crunch” and related market volatility mean for FI e-Trading?

Volatility is not only the friend of good leveraged investors it is also the friend of any exchange or ECN that makes it’s money from traded volumes. As such, on the face of it, your gaggle of FI ECN’s should be delighted with the recent volatility in the markets.

However, so often large moves in the market are actually driven by liquid derivatives (or sometimes little of anything if liquidity on one side is near non-existant) rather than the underlying asset. So bonds may sell-off by 15 bps on light trade due to the Bund future getting turned over in large size. But generally the likes of MTS, TradeWeb etc in the govy space will have seen enhanced volumes over the past weeks.

What of MarketAxess? It is a credit driven environment at the moment, however you can’t help but think they’d be steady at best. Given the illiquidity in cash credit product.

Now, how about launching a new product into this environment? LiquidityHub would possibly have preferred a more benign environment than this in which to make it’s debut. There is still several weeks left, but will traders look to use a new system during uncertain times?

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