Collaboration, adaptation, or disruption? Wall Street, Fintech and corporate bond trading

Fixed-income corporate bond markets were the last bastion of non-electronic trading activity. For most of the twentieth century these markets were also dominated by the largest Wall Street dealer-banks. These banks had long argued that corporate bonds were too complex and illiquid to be electronified. In reality though, opaque Over-The-Counter trading in these bonds allowed Wall Street to monopolise highly uncompetitive markets; this market environment had changed very little over the decades, despite the financial services revolutions that had gripped other markets. By the 2010s however, Wall Street banks had finally begun to lose their stranglehold. This paper tracks the two explanatory factors, the emergence of new financial technology and the decisive intervention of state managers and post-crisis regulation – in the form of the Volcker Rule and Basel III. Recent accounts have become increasingly sceptical of the disruptive, pro-competitive impact of fintech. We argue that – at least in markets for US corporate bonds – there is evidence of a more competitive, democratic