Municipal bond traders are leaning into smaller tickets as they embrace electronic trading, Q1 2025 metrics show.
E-trading as a percentage of the market increased marginally year-on-year (YoY), up by 1.3 percentage points to 18.6%. Although there was a 1% dip to 18% between February and April, Coalition Greenwich noted that the overall increase in electronic trading and automation in munis, traders would have been unable to execute during market turmoil in April.
Trade counts were by more than a quarter YoY in the first three months of 2025 to 64.8k, while the average trade size fell by 12% to US$211k.
In its report, Coalition Greenwich stated: “An analysis of volume and e-trading data in the muni market going back to 2022 shows that e-trading as a percentage of total volume and average trade size have a negative correlation of 0.91. In other words, as e-trading grows, the average trade size gets smaller.”
After record highs throughout the quarter, with Q1 average daily notional volumes (ADNV) up 11% YoY to US$13.6 billion, 9 April saw a single-day record of US$32.5 billion traded in a belated response to the first day of US tariffs (3 April). In April alone, ADNV hit US$20 billion – an all-time record.
“Electronic trading played a crucial role in enabling the market to support the massive volume spike,” Coalition Greenwich observed.”
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