Compared to the banks, trading companies stand ready to take advantage of the bond chaos

Trading firms see the bond markets and especially derivatives (futures, etc.) as one of the main sources of profits this year, according to the survey carried out in the first quarter by Acuiti and Avelacom. They intend to take advantage of rising interest rates and volatility on debt and its derivatives. The increase in government deficits and the amount of global debt increases the size of the market and thus their potential profits. Market tensions since 2022 (inflation war in Ukraine, bank debt, US default risk, etc.) have awakened a market numbed by years of low interest rates.

The trading firms surveyed believe that the liquidity of the French sovereign debt (Obligations Assimilables du Trésor) in Europe is better than its German or Italian counterparts. However, it remains lower than the largest bond market in the world, government bonds, in the United States. The more “liquid” a financial asset is, the easier it is to trade large amounts of it without causing the price to fluctuate too much. In 2022, UK government bonds suffered the biggest deterioration in liquidity due to the “mini-budget” political crisis and market chaos, according to traders.


The large national and foreign banks are still the states’ only interlocutors on the primary debt market as for government bond specialists (SVT), selected by the French state. They have retained their rights and their market shares in sovereign debt. Unlike the US, which opened its government bond market to trading firms (60% of the interbank market), Europe was reluctant to follow this path.

Certain market segments, such as corporate debt, are not active and liquid enough for high-frequency trading firms to take an interest in them, invest their time and mobilize their technology. They prefer to concentrate on the most active products such as futures contracts on Bund, OAT or BTP (Italy). In terms of debt, trading companies have targeted niches and segments where they compete with investment banks.

Trade: Wages and hiring rise

By 2023, nearly three-quarters of trading firms will hire traders and computer code specialists to design and improve the algorithms they use to make money in the markets. This battle to recruit or poach the best profiles from competitors will put upward pressure on salaries and bonuses. As early as 2022 in the US, the majority of IT developers in commerce will have recorded at least a 25% increase in their salary, according to the survey by Avelacom and Acuiti. 60% of traders saw an increase of less than 10% in their remuneration (compensating for inflation) and a quarter between 10% and 25%. To the salary is added the bonus, which depends on the performance of the operator and his department (rates, shares, etc.).

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