The Evolution of Global
Bond Trading in Japan
Q3 2024
Bond Trading in Japan
Q3 2024
2 | COALITION GREENWICH
Executive Summary
Global demand for fixed income assets has surged in recent years
as yields have increased amidst efforts to dampen inflation in major
markets globally. Japanese investors in particular have sought out
government and corporate bonds from developed and emerging
markets (EM) that offer higher yields than can be found at home with
little or no additional risk. This demand has increased trading volumes
across most fixed income products, leaving investment managers
in search of solutions to manage both the volumes and the data
necessary to find the liquidity they need.
While human intelligence and relationships remain central to the
functioning of fixed income markets in Japan and around the world,
technology is augmenting investors and traders as they grapple with
this new demand. Electronic trading tools are playing a major role
in helping investors manage these new market challenges. While
e-trading in Japan lags other developed markets, our research has
found that adoption in Japan and in Asia more broadly is growing as
local investors seek out liquidity in both local and foreign markets. And
while the market dynamics of each country and bond can vary widely,
bond-trading venues have developed a variety of trading protocols that
allow trading of nearly all bonds, from the most liquid to the least and
everything in between.
Based on interviews with investors in Japan and Asia in the fourth
quarter of 2023, this research examines the evolution of fixed income
market structure in Japan, how technology is adding efficiency to the
trading workflow, the growing role of electronic trading, tailwinds and
headwinds impacting e-trading growth, and the opportunities available
to Japanese fixed income investors via the electronic trading ecosystem.
Sell-side revenues for G10 rates
trading in Japan reached $4.8 billion
in 2023, a year-over-year
growth rate of
66%
C O N T E N TS
2 Executive Summary
3 Introduction
5 Why E-Trading is Growing
7 Opportunity for Japanese Investors
8 Impediments to Growth
10 Competition Drives Progress
10 Access to Green Bonds
11 Never Say Never
Kevin McPartland is the Head of Research
for Market Structure & Technology at
Coalition Greenwich. Seiji Ishii, Head of
Japan, leads our advisory with Japanese
clients. Vignesh Srinivasan, Research
Manager in Asia-Pacific, advises the
markets divisions of several global and
Japanese dealers.
Executive Summary
Global demand for fixed income assets has surged in recent years
as yields have increased amidst efforts to dampen inflation in major
markets globally. Japanese investors in particular have sought out
government and corporate bonds from developed and emerging
markets (EM) that offer higher yields than can be found at home with
little or no additional risk. This demand has increased trading volumes
across most fixed income products, leaving investment managers
in search of solutions to manage both the volumes and the data
necessary to find the liquidity they need.
While human intelligence and relationships remain central to the
functioning of fixed income markets in Japan and around the world,
technology is augmenting investors and traders as they grapple with
this new demand. Electronic trading tools are playing a major role
in helping investors manage these new market challenges. While
e-trading in Japan lags other developed markets, our research has
found that adoption in Japan and in Asia more broadly is growing as
local investors seek out liquidity in both local and foreign markets. And
while the market dynamics of each country and bond can vary widely,
bond-trading venues have developed a variety of trading protocols that
allow trading of nearly all bonds, from the most liquid to the least and
everything in between.
Based on interviews with investors in Japan and Asia in the fourth
quarter of 2023, this research examines the evolution of fixed income
market structure in Japan, how technology is adding efficiency to the
trading workflow, the growing role of electronic trading, tailwinds and
headwinds impacting e-trading growth, and the opportunities available
to Japanese fixed income investors via the electronic trading ecosystem.
Sell-side revenues for G10 rates
trading in Japan reached $4.8 billion
in 2023, a year-over-year
growth rate of
66%
C O N T E N TS
2 Executive Summary
3 Introduction
5 Why E-Trading is Growing
7 Opportunity for Japanese Investors
8 Impediments to Growth
10 Competition Drives Progress
10 Access to Green Bonds
11 Never Say Never
Kevin McPartland is the Head of Research
for Market Structure & Technology at
Coalition Greenwich. Seiji Ishii, Head of
Japan, leads our advisory with Japanese
clients. Vignesh Srinivasan, Research
Manager in Asia-Pacific, advises the
markets divisions of several global and
Japanese dealers.
