Bond Data as Big as the Ritz

Is the online corporate bond trading market worth $100 billion?

TABB Group points out that Bondpoint has a market share of about half a percent (.4%). ICE just purchased the company for $400 million. Trading revenues alone for the stand-alone business (which are said to be less than $30 billion) do not seem to justify such a price, even if commissions were above standard. So why pay so much?

Google and every sentient investor awake for the past decade will say the answer to the mystery is in DATA.

DealVector has long argued that the largest value data set to remain embargoed from search in the Google era is bond-holder (and therefore bond-matching) information. Fixed income securities outstanding total over $100 trillion (with a T), a large percentage of which are illiquid. US Corporate bonds in the US comprise $7-10 trillion of that amount. Note this compares to global GDP of around $75 trillion. Fixed income derivatives (including interest rate swaps) are another $700 trillion of notionals outstanding. In this light, $100 billion of implied value for the corporate bond market does not seem so expensive. It’s nothing for a piece of the Diamond as Big as the Ritz.