JOURNAL ARTICLE

Riskless Principal Trades in Corporate Bond Markets.

  • Published In: Journal of Fixed Income, 2026, v. 35, n. 3. P. 18 1 of 3

  • Database: Business Source Ultimate 2 of 3

  • Authored By: Craig, Louis; Harris, Larry; Shohfi, Thomas 3 of 3

Abstract

We identify growth in riskless principal trades using corporate bond market trade data. These trades are arranged by a dealer that obtains compensation by marking up the price instead of charging a commission. In the US markets, over the past 18 years, riskless principal trades increased from 16% to 42% of all customer trades, while the size of nonzero markups declined 48% on average, with most changes occurring recently. The growth in electronic trading systems undoubtedly explains these trends, but most traders cannot directly access these systems. Some changes to bond market structure could further decrease investor transaction costs. [ABSTRACT FROM AUTHOR]

Additional Information

  • Source:Journal of Fixed Income. 2026/01, Vol. 35, Issue 3, p18
  • Document Type:Article
  • Subject Area:Business and Management
  • Publication Date:2026
  • ISSN:1059-8596
  • DOI:10.3905/jfi.2025.1.219
  • Accession Number:190956393
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