In May 2021, 62% of notional US treasury trading was on electronic order book, meaning order book volume in lower in US Treasuries as an overall proportion of trading than it had been at pre-pandemic levels. At the same time volatility has remained low, which collectively may suggest high-frequency trading firms are less involved than they have been historically.
US Treasury markets are potentially facing greater regulation, and while the speed at which changes may be enforced by a very busy regulatory market, the effect of central clearing could be to better support all-to-all trading.
Kevin McPartland, head of market structure and technology research at Coalition Greenwich, sees great appetite for change, but markets have hit an equilibrium.
