Bondcube Failure Reveals Pricing Flaw in $8 Trillion Bond Market
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The collapse of fixed-income trading platform Bondcube after only three months highlighted an obstacle to creating new trading venues in the $8 trillion market: a lack of prices to foster liquidity.
Corporate bonds change hands privately over the phone or instant message or on a handful of electronic venues. Although completed transactions are reported with a 15-minute delay, that represents only a sliver of the market. Many bonds don’t trade for weeks or months, leaving gaps in pricing that historically were filled by banks that had more market information at their command than their customers.