Episode 2: Under the Hood of the $8 Trln Corporate Bond Market
Nov 16, 2015
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Chris White, creator of a Goldman Sachs bond trading platform, discusses the complexities of the $8 trillion corporate bond market. He shares insights on the resistance to change in the market, the evolution of electronic bond trading platforms, and the challenges in fostering innovation at traditional financial institutions.
Challenges in modernizing the $8 trillion corporate bond market due to resistance to change and size constraints.
Importance of recognizing subjective nature of liquidity in bond market and addressing potential liquidity crises proactively.
Deep dives
Moving Towards Electronic Trading in the Bond Market
The podcast discusses the evolution of electronic trading in the corporate bond market, highlighting the challenges faced due to the market's size and lack of modernization. The guest, Chris White, a former vice president at Goldman Sachs, emphasizes the transition from human-based trading to electronic trading and the need for market modernization. He compares market stages, highlighting the complexity of trading bonds compared to stocks.
Liquidity Concerns and Market Perception
The episode explores liquidity concerns in the bond market and challenges common perceptions around liquidity. Chris White discusses the subjective nature of liquidity, comparing it to beauty, and debates whether liquidity is a natural or service-based resource. He highlights the importance of market perception and the need for strategies to address potential liquidity crises.
Innovation and Resistance to Change in Bond Trading
The podcast delves into the cultural and technological changes within investment banks, focusing on the resistance to change in bond trading practices. Chris White reflects on his experience at Goldman Sachs, where he introduced an electronic bond trading platform, emphasizing the challenges faced in implementing innovative solutions due to cultural beliefs and institutionalized behaviors within the market.
(Bloomberg) -- It's definitely big and it might be broken. It's the bond market! The corporate bond market, that is. In the second episode of Odd Lots, hosts Tracy Alloway and Joe Weisenthal talk corporate debt with Chris White, the creator of a Goldman Sachs bond trading platform and a longtime market structure specialist. We learn about the difficulties of shaking up an $8 trillion market that has so far proved stubbornly resistant to change. We also hear why White stopped calling internal meetings at Goldman, and discover the difference between "two-minute guys, two-year guys and 10-year guys" at the storied investment bank.