MarketAxess is launching opening and closing auctions for US credit “in the coming weeks”.
Opening and closing auctions have long been available in equity and derivatives markets, allowing market makers and liquidity takers to place orders and match at the market price.
Global head of data and ETF solutions at MarketAxess Kat Sweeney stated, “Auctions in derivatives and equity markets have proven to reduce volatility, increase transparency and concentrate liquidity. Today’s fixed income markets are evolving quickly and there is a clear need for a market-wide auction protocol where price can be formed and liquidity can be unlocked.”
MarketAxess noted that these standardised protocols are intended to reduce volatility and price movement through simultaneous order input, order matching and confirmation rules. Aggregating supply and demand will improve price formation and transparency, it added, granting access to concentrated liquidity.
Auction results can act as a market benchmark, the firm said, and be integrated into end-of-day pricing services.
The protocols will initially be offered for US investment grade and high yield bonds, accessible to clients and dealers on the MarketAxess X-Pro trading platform.
The protocols were developed with the input of an advisory board of buy- and sell-side participants, including AllianceBernstein, BlackRock, DWS, and State Street Investment Management.
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