that was YOUR quote..all i'm trying to tell you, is that you wrong on this particular assumption. there was at least one ECN for bonds back in 2004. see IB link above.. since you having hard time admitting the facts ,you switched to this- it's ain't same shit...i get it..take a hike in direction provided in my post on page 2
Okay... you win the pedantry competition. There does exist some insignificant single-platform order book ECNs for corp bonds. You win the internet. You can now choose to ignore how the rest of the billions of dollars in corp bonds moves everyday.
The coolest part though about the app platforms is that the inventory does update in real time. So it does not matter if you see a fill on TRACE lets say. All that matters is the particular inventory of a specific bond dealer wired into your network. So If you are wired in via your specific broker dealer and are buying/taking size away form current ask size/price its immediately reflected in the real time quote. This is true of two other prop platforms that I know of which have apps that run exlusively off virtual bond networks. So again, using Cisco bonds example of 1000 under the illustration you are using a virtual bond networke based app/broker. You type in the CUSIP and this is what you see: $98.75 (250) X $100.00 (1000) You type in a buy order for 25 bonds. After 3-5 seconds you order gets filled status. Now the spread above immediately relfects that purchased inventory: $98.75 (250) X $100.00 (975)
The normal bond quote in the US is a clean quote. The exceptions are: Defaulted bonds trade flat. They aren't paying, so there is no accrued interest to be had. PIK bonds trade with accrued PIK coupon in the price. They drop in price on the coupon dates.
Yes, this is how all inventory system work. The problem (other than "subject") is that those levels are by definition NOT the best level you can get the bonds for; If you could actually talk to the desk, you can likely get much closer to the true price, which is almost always inside of the inventory prices. There's some interesting microstructures here, but mostly in the dealer's advantage (unless you can shop around). But what makes this different from a order-book type of system is that YOU cannot post inventory.
As far as the inventory system goes and the little microstructures you referred to, its always to the dealer's advantage for certain. I am well aware of this. Your other point on "talking" to the actual desk and getting inside the inventory price is true and in many cases there are just too many hands in the cookie jar as a typical OTC broker dealer might show a slightly higher price then the best actual offered price. But getting a better price with the most possible direct access would certainly yield you an improvement on price I would venture to say all the time, depending on your size of course. The bigger the whale...well you know how that goes.
Meaning you could get three different prices for the same bond at the same moment in time between an ML type broker who might be using their own inventory vs. an OTC wired broker with online capability but your order is still subject and it takes several minutes for status update vs. a proprietary app that offers immediate one click gratification. Point was simply the closer you can get to the actual bond dealer by eliminating some of these external components that are really unnecessary for someone who knows what they want will yield you the best possible price.
Um... when you trade with ML or BAC (both BAC now) or UBS or GS you don't trade with a broker; They are dealers. They can sell you their inventory or buy your bond for their inventory. They are the bond dealers. They are not brokering the deal for you - they are the counterparties. The problem with the inventory system is that no major deal actually wants to post accurate inventory, since that would make their positions transparent to their competitors. Instead, they send what's known as "axes" to their actual clients.