Over-the-counter market
Eurobonds trade mainly over the counter. Dealers at banks quote bid and ask prices and trade with clients and each other. Exchange listings exist but are rarely where the trading happens.
Electronic platforms
A large share of trading now runs through electronic platforms where institutional investors request quotes from several dealers at once. Pricing screens and composite prices help investors see where bonds are trading.
Bid–ask spread
The difference between the price a dealer pays (bid) and charges (ask) is a cost of trading. Large, recent benchmark issues from frequent issuers may trade with very narrow spreads; small, old or lower-rated issues can be much wider, and in stressed markets it may be hard to sell at all.
Factors affecting liquidity
- Issue size and how widely the bond is held.
- Time since issue – liquidity often falls as bonds age.
- Rating and index inclusion.
- Overall market conditions.
Transparency rules
In the European Union and the UK, trading venues and investment firms publish post-trade information on many bond trades under MiFID II/MiFIR and the UK equivalents, improving price transparency.