EAGG - Improving Bond Market Liquidity - The Silver Bullet
To liquefy the bond market, the financial risk management profession thinks to introduce the innovations to bond trading that led to the stock market liquidity/volume explosion of the early 21st Century. Various financial firms have introduced four principal innovations:
- Index funds
- Futures contracts
- ETFs
- Electronic trading platforms
With only middling results. Applying the changes in stock market trading to the bond market without any change to the bonds themselves has met with indifferent success.
Bonds are different
Because bonds are different. The bond market skipped an important step in its evolution. Unlike the stock market,