(1) Yes, IB is a big firm; But they are NOT a big bond trading counterparty. Those are dominated by the likes of GS, BAC, UBS, etc... Not firms that are better known for their equities market making. I completely challenge that they can match any significant number of bond trades internally. That's why they have Knight as a trading venue... Knight is a bond trading firm; (2) How do you know they aren't calling (physically or electronically) around? They plainly use execution venues that do exactly that! That's what tradeweb is. (3) If your execution depends on the bond being located, doesn't that mean the quote you see AREN'T firm! That's the definition of a quote that's subject! I feel like you actually entirely agree what what I'm saying, but completely fail to see that... Everything you are saying exactly confirms what I'm saying...
In some instances, especially BAC or ML, you are right, basically allot of times you are merely feeding off their own stuff which can be rather limited especially junk, you have to call them on the phone then. And there are some brokers who still have executables that are subject, like Scwab for instance. As far as the electronic interface stuff goes, Etrade, IB, and believe it or not, Fidelity. I laughed at a former colleague when he told me he switched his individual account to them, which is very sizeable in the upper 6 figures. He knows I am a corp junkie so let me test drive it. Basically their inventory is pretty damn good, including junk. They are definitely networked within one or more of the virtual bond networks and not the traditional OTC style. So you can either type in a cusip or search by name, etc. Anyways long story short, he was looking to park a little short term money and ended up buying a few corps himself and the fills were less then 30 seconds because you have to refersh the page as the interface is static/web page driven. Where other brokers like IB has a dynamic interface since you are launching essentially what is an app and you can follow every moment in real time without refreshing. Etrade is also similar in this regard.
I have bought bonds from etrade in my own personal retail account. It's not electronic trading; it's just inventory. I've gotten calls backs from their trading desk, who operates exactly like all corp bond desks I've ever seen. It's true that most of these brokers have an inventory page. Most of the time, they are more usable than the crap dealer bloomberg pages (though, obviously, more liquidity and variety there). My point to bob is that there's no true electronic market place. Inventory searching and then trading via the traditional desk is not true electronic market place, don't you agree?
two guys are telling you same shit and you still in denial.. how do i know,that they aren't calling every time i place an order? how to fuck i got 300 bond positions on my retail account few years ago? hundreds of orders submissions\modifications ...they probably have 3-5 guys max at their trading desk..common man..wake up..everything is automated. even i was able to do this almost decade ago..
---My point to bob is that there's no true electronic market place. Inventory searching and then trading via the traditional desk is not true electronic market place, don't you agree?--- disagree. call IB and ask them,if you having problems to believe my story, that it could be done w\o any human interaction(and was done by at least one guy-(me) on retail level long time ago) for exact same reasons DeltaSpread described..
How do I know? Because I looked at IB's product page for corporate bonds, looked at the market venues they use, and KNOW what those are because I've used them too! Just because the calls are now placed electronically and small orders are often filled quickly over electronic request-for-quote platforms DOESN'T make it a direct-access order book market. Unless you are making up your own definitions. But then, this whole thing started because you've never heard the term clean and dirty quotes...
once again-this is how it use to work back in the day(when i was buying them)... here is link for ya- http://www.interactivebrokers.com/en/general/communiques/2004/12-10-04.php?ib_entity=llc that was 2004..are you saying that today, in 2012 everyone is on the phone,caling to each other,when some russian guy placing an order to buy a bond on his retail account via API?give me a break..
I actually pulled the Etrade example out of my proverbial arse and have not used it hands on; only going on what one particular trader told me that they very recently, a few months ago, dramatically improved their bond platform comparable to Fidelity. So phone calls should not be part of that equation to even be considered in my opinion. I think this what you are two are arguing over and this is what Bob is probably getting at. Lets say you have a specific bond dealer who has inventory of 1000 Cisco bonds he wants to sell. This dealer could be not only wired into the OTC but also into one or more of the virtual bonds networks as well. So the reality is, depending on your broker dealer and how they are networked, you could basically in essence buy these CSCO bonds with one click of your mouse via the virtual bond network route and get filled in seconds. Or if your broker dealer is only wired in via OTC market, then you might have to call a bond trader or you could possibly get order entry via online, BUT you would still be susceptible to "subject" when it comes to executable.
Okay, so this says the first three venues: NYSE (a place with almost zero volume for corp bonds - ever looked at the most active traded page? it's a joke), IB internal desk (who sees no significant flow of bond orders), and BondDesk (another very small bond market destination) will try to match your order first; If that doesn't work, it goes to the more traditional routes. So this confirms what I've been saying: the levels you see are not "live" per se, but "subject". Subject to whether they are internalize (unlikely for all but the most liquid names), and then to traditional venues. How is this not what I've been saying since the beginning: there's no centralized national market place for corp bonds. It's all done in fragmented, OTC fashion.
Maybe that's the problem? Bob is taking what I say waaaay too literally? I've been trying to make it clear that a phone call doesn't have to be a phone call - it can be an electronic request for quote as well. When you lift inventory, it's "subject". The dealer can always say level has changed. This is what makes it different from something like direct access for equities: where prices are firm for execution. Anyway, I feel like we are all talking about the same thing (or at least you and I are).