The evolution of the fixed income tradable ecosystem: North American and European credit markets

The global bond markets are extensive, with individual bonds all trading with their own unique terms, coupons and maturities. Individual bonds are also often illiquid or difficult to source and, therefore, not broadly available. Fixed income indexes have helped standardise the bond markets, taking this largely over-the-counter market and creating defined units. 

Fixed income tradable indexes take this one step further by offering market participants strategies that may be used as the basis for tradable products. Fixed income tradable indexes underlie financial products, which take several forms, including exchange-traded funds, standardised total return swaps, futures and credit default swap indexes. These instruments have evolved to track a liquid segment of the bond markets and offer options including inherent diversification, ability to be invested and trade efficiency.