One of many predominant challenges for buyers is to handle the liquidity as new issue and new kind of volatility regime. Awared buyers ought to make certain that chosen infrastructure has the capabilities to combination the precise data, to wash the lab, to research the noise versus the tendencies, to reconfigure in quasi real-time our automation workflow and to think about the evolution of the noise.
Senior advisors ought to present sensible content material and sensible intelligence to portfolio managers, to coach them, to elucidate to them that the market can change situation and that implies that they as supervisor can execute change”. As a result of portfolio managers will be extra aggressive in one other e-book, or aggressive out there to brush the liquidity, pondering that the value motion can transfer away from attractible situations. And this sort of metric ought to be normalized.
A extra comforting message got here from the sell-side, at the very least in developed nation credit score and charges markets. Product innovation, know-how and new market entrants are boosting bond liquidity. However buy-side corporations query what this implies for them. Speaking to the sell-side, bond liquidity has entered a brand new golden age. Digital buying and selling platforms have allowed new entrants reminiscent of giant asset managers to seize market share from conventional financial institution incumbents, providing algo-driven options. But the buy-side is sceptical, specific since relationships with financial institution main desks and syndicates have to be preserved. Now the liquidity is within the eyes of the beholder. In the meantime, exchange-traded passive bond funds provided giant fastened earnings baskets to be consistently rebalanced, offering a brand new supply of liquidity for the market.
