VGSF - WU Vienna - LC

Terrence Hendershot, Berkeley Haas School of Business

Campus WU D3.0.225 11:00 - 12:15

Organizer VGSF

As part of the ser­ies of the "Fin­ance Re­search Sem­inar", VGSF wel­comes Ter­rence Hende­r­shot from the Berke­ley Haas School of Busi­ness to present his re­search pa­per.
Per­sonal Webpage

Pa­per

All-to-All Li­quid­ity in Cor­por­ate Bonds

We ex­am­ine tech­no­logy en­abling dis­persed in­vestors to dir­ectly trade with each other in over­-the-­coun­ter mar­kets via the largest elec­tronic trad­ing plat­form in cor­por­ate bonds start­ing Open Trad­ing (OT) to al­low in­vestor-to-in­vestor trad­ing. Over our six-year sample, OT stead­ily grew to win 12% of trades on the plat­form, with 2% be­ing in­vestor-to-in­vestor trad­ing, 3% be­ing deal­ers trad­ing with new cli­ents, and 7% be­ing new li­quid­ity pro­viders act­ing like deal­ers. This sug­gests that in­vestors in cor­por­ate bonds prefer in­ter­me­di­ation to dir­ect trade. However, OT can en­able new deal­ers to com­pete in li­quid­ity pro­vi­sion. OT's steady growth fa­cil­it­ates meas­ur­ing its ef­fect on in­vestors, deal­ers, and com­pet­i­tion to provide li­quid­ity us­ing an auc­tion model.



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