Monday, November 5, 2018 Stamford, CT USA — Emerging market fixed-income trading volumes are projected to be on the rise in the next year, and a growing share of those trades will be executed electronically.

Nearly one-third of the U.S. asset managers and half of the U.S. hedge funds interviewed for a new study by Greenwich Associates expect their volumes in emerging markets fixed income to increase in the coming year. 

Based on current trends, at least 70% of those investors will execute some portion of those trades electronically. From 2017-2018, the institutional investors participating in Greenwich Associates research executed 14% of their emerging-market fixed-income trading notional volume through electronic platforms.

“Technology is increasing the flow of information, removing the language hurdle and connecting disparate brokers and investors from all over the world, allowing trades to consummate that only a few years ago would have been too expensive, if not impossible, to get done,” says Kevin McPartland, Head of Research for Greenwich Associates Market Structure and Technology and author of Emerging Market Bond Traders Embrace E-Trading.

The report analyzes execution trends of U.S.-based investors across the rates, credit, hard-currency, and local-currency products issued by the 67 countries that make up emerging market fixed income. That analysis shows that emerging market investors have broadened their access to liquidity providers in recent years and direct less of their trading to their top dealers. 

In 2014, the top five emerging market dealers handled 65% of U.S. investor trading in emerging market fixed income. Today the top five handle only 54%, with share lost to regional dealers around the world.