CFA Level I · CFA Level I Exam · Fixed-Income Issuance and Trading
Compared with a traditional dealer-based over-the-counter market, an all-to-all trading platform for bonds is most likely to:
An all-to-all platform most likely lets buy-side investors trade directly with one another rather than only with dealers. This widens the set of liquidity providers and can narrow spreads. It does not remove price differences between bonds or force all trades through a central exchange.
- Aremove all pricing differences between bond issues
- Ballow buy-side investors to trade directly with one anotherCorrect
- Crequire every trade to pass through a central clearing exchange
Explanation
All-to-all platforms let investors, not only dealers, post and accept prices, so buy-side firms can trade with each other and may improve liquidity. They do not eliminate price differences between bonds, and they do not by themselves force exchange clearing for every trade.
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