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Why traders might need to change their habits

In 2022, many buy-side bond traders found market illiquidity incredibly challenging to manage. While the response to these conditions is often to directly connect with a small number of brokers bilaterally, data indicates that best execution for many trades could be found through potentially unexpected routes.

Max Callaghan of MarketAxess and Ramon Baljé of Flow Traders tell us how a close reading of data has allowed some traders to break free of old habits and find new routes to liquidity, through increasing the counterparties contacted for smaller sized trades, expanding the types of counterparties used, and by getting deeper into pre-trade analytics rather than relying on muscle memory alone.