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e-Commerce in the Fixed Income Markets The Bond Market Association 2005 Electronic Trading Survey Summary

Background The Bond Market Association has conducted the survey every year since organizations participated in this year’s survey; some operate more than 1 platform Survey focus Who the platforms are and who they trade with Inter-dealer (29) Multi-dealer to customer (19) Single dealer to customer (22) Methodology/technology used for price discovery and execution Request For Quote - RFQ (26) Order Driven (33) Cross Matching (27) Auction (11)

Electronic Trading Leads to Price Transparency Most platforms allow participants to see executed prices Many platforms make prices available to non-trade participants and data vendors Over 3 in 4 publish executable quotations Request For Quote method widely used in multi- dealer to customer platforms, enable investors to see multiple executable or indicative quotes at the same time on a single screen Some platforms enable customers to see prices from third party sources such as MSRB and TRACE

How Many Platform Participants First year the question was asked Of those who responded, answers varied The largest platform reported 7,600 investors Four reported >1,000 Five reported 500-1,000 Seventeen reported more than 100 registered institutional investors Liquidity providers 32 had dedicated providers Eight had more than 25 Average of 14 among those with less than 25

Platform Volume Metrics Average trade size ranged from $25,000 to $15 million The Bond Market Association estimate: daily cash market trading volume average: $750 billion in U.S. and Europe Growing volume 48 reported volume change in 2005 from reported increases 14 reported at least a 20% increase 4 between 10% -20% increase

Clearance and Settlement Services Most (29 of 54) provide direct access to trade settlement Reported links to a number of trade clearance and settlement services including DTCC, NSCC, GSCC, Euroclear, Eurostream and Bloomberg

Who are FIX Compliant FIX Version 4.4 came out in 2003 following extensive collaboration of Bond Market Association members, platform vendors and Fix Protocol Association members 17 indicated they were FIX 4.4 compliant Survey asked about the future; leading themes included: Further 4.4 adoption Refinement of Application Program Interface “Connectivity hubs” for communication among market participants and trading systems

Electronic Trading Platforms and FIX Protocol