MarketAxess Holdings Inc. (MKTX:US), the operator of an electronic bond trading platform, is starting an index measuring liquidity in Europe’s corporate debt market.
The European Bid-Ask Spread Index will compile prices of investment-grade and high-yield company bonds in euros and pounds, according to a statement from New York-based MarketAxess. The gauge will help investors calculate the cost of buying and selling securities in Europe using pricing data from Xtrakter, which MarketAxess bought in March and last year monitored more than 69,000 bonds.
Liquidity in Europe’s bond market is concentrated around a small number of recent benchmark issues, especially those from well-known companies, the firm said. When trading smaller or older bonds, investors face transaction costs that represent a greater proportion of real returns, MarketAxess said.
“Given market structure changes brought about by regulations and a market environment where opportunities to improve yield are scarce, institutional investors are more challenged than ever to actively manage their bond portfolios,” said Alex Sedgwick, head of research at the firm.
MarketAxess started a similar index for U.S. corporate bond in June that uses data from Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
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