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Sizes of European government debt trades halve in 2023-ICMA
Published by Jessica Weisman-Pitts
Posted on September 27, 2023
2 min readLast updated: January 31, 2026
Global Banking & Finance Review®
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Published by Jessica Weisman-Pitts
Posted on September 27, 2023
2 min readLast updated: January 31, 2026
By Yoruk Bahceli
(Reuters) – Investors are having to put on much smaller trades more frequently in Europe’s government bond markets this year, trade body ICMA said on Wednesday, against a backdrop of declining liquidity as markets adjust to sharply tighter monetary policy.
Government bonds, as the safest assets that underpin financial markets, are meant to be bought and sold with ease, but have become much more volatile since last year, as they digest central banks raising rates at the fastest pace in decades and winding down their massive bond holdings.
Median trade sizes fell some 45% in Britain’s government bonds, 50% in Germany’s and 58% in Italy’s during the first half of this year compared to the same period in 2022, according to data from the International Capital Markets Association, which covers more than 80% of bond trades reported in the European Union and Britain.
Average trade sizes also dropped, down 37% in Germany and 22% in both Italy and Britain, according to the report, which ICMA started a year ago.
While the average size of individual trades dropped, the number of trades increased significantly, rising 54% in Britain, 45% in Germany and 24% in Italy.
“We hear anecdotally from some members that it is becoming increasingly challenging to execute large block trades,” Simone Bruno, data analyst at ICMA, told Reuters.
“As a result, more trades are being executed in smaller sizes,” Bruno added.
Investors have also said uncertainty around the macroeconomic outlook and central bank policy this year has made them reluctant to take as much risk as in the past, leading them to take on smaller positions.
In U.S. Treasuries, median trade sizes tracked by ICMA were unchanged, average trade sizes were up 14%, while the number of trades rose 7%.
(Reporting by Yoruk Bahceli; Editing by Amanda Cooper and Alison Williams)
Liquidity refers to how easily assets can be converted into cash without affecting their market price. High liquidity means assets can be quickly bought or sold.
Monetary policy is the process by which a central bank manages the supply of money, often targeting inflation rates to ensure price stability and economic growth.
Trade size refers to the amount of a security or asset that is bought or sold in a single transaction. It can impact market liquidity and price volatility.
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