Weekly Highlights

• Recent market conditions have generated concerns about bond market liquidity. How is that affecting fixed-income ETFs? This week, we take a look.

• Overall, volatility and ETF market share tend to be correlated; last week was no exception. ETFs reached 33% market share of the top 3000 traded market names on 10/13 - the highest level we’ve seen since the volatile beginning of the second quarter. On that same day, fixed-income ETFs reached a high of almost 20% of ETF trading, even higher than their market share during the last Fed announcement.

• Since the Fed announcement, fixed-income ETF daily volumes have been up approximately 15%. Although that may look like increased liquidity, it comes at the cost of 8% higher spreads. While spreads have widened market-wide, fixed-income ETFs have seen a greater drop in post-trade stability than their non-fixed-income peers. And most interestingly, while average trade size has risen for ETFs in general during this recent volatility, that’s not the case for the fixed-income group. Together this suggests higher trading costs for these important trading tools as markets adjust to new interest rate regimes.

• As trading costs increase, subscribers on IntelligentCross continue to find unique liquidity in the ETF space. October is shaping up to be the venue's best month of the year for total platform hit rate in ETFs and for daily match quantity of demi-block or larger (starting at 2000 shares). It's also our third-best month of the year for ETF orders displayed on our free market-data feed, IQX, with prices better than the NBBO on arrival - typically saving almost 1/3 of the spread.

• If you’re not using our platform to unlock trading performance, get in touch. Please contact the desk for more information on our weekly data or to connect to IQX – it's available directly or through Exegy, MayStreet, Redline, and ACTIV.