State of Information Technology Support for Traders in Fixed Income Markets

A fixed-income security is defined as one whose income stream is fixed for the duration of the loan and where the maturity and face value are known. It is estimated that the global fixed-income market is about $40 trillion with the US having the lion’s share of $19 trillion. There were at least 74 trading platforms in North America and Europe in 2004. However, it is estimated that only about five percent of fixed-income trade is performed through electronic transaction systems. This is very low when compared with use of information systems in support of equity trade. Our research is guided by the following central question: What are the implications of using IT to mediate electronic brokerage relationships that are enacted through the work practices and interactions of actors representing buyers and sellers in financial institutions within the context of fixed income market. This paper, based on interviews with the senior managements and traders of 10 major financial institutions, provides an overview of information system support for traders in fixed-income trade markets.