The Modern Bond Market
Tomy Lee Chaojun Wang Adam Zawadowski∗
September 29, 2025
Abstract
We identify a widespread practice that counteracts fragmentation in the corpo-
rate bond market. On modern trading platforms, traders can simultaneously
request quotes for many bonds from dealers, then trade against any subset of
the dealers’ quotes. Such List requests comprise 80% of all requests on Mar-
ketAxess, the largest corporate bond platform. Using the 10 million requests
on MarketAxess in 2021-2022 linked to List-level identifiers, we document that
traders substitute across bonds within the same List. Fifth of bonds in Lists
are abandoned without a fill. Within a List, a bond quoted the higher-ranking
spread is discontinuously more likely to fill than a bond quoted a nearly identi-
cal yet lower-ranking spread. Dealers intensively substitute within their Lists,
whereas passive funds typically fill every bond in their Lists. The modern bond
market evolved a simple mechanism to address fragmentation.
Keywords: Corporate bonds, fragmentation, multi-dealer platforms, List trading,
substitution
JEL Classification: G12, G18, G23, D47
∗Lee and Zawadowski are at Central European University. Wang is at the Wharton School,
University of Pennsylvania. We thank Gio Accurso, Julien Alexandre, and especially Sinem
Uysal at MarketAxess and David Krein for the data and invaluable discussions. We thank
Edith Hotchkiss, Thomas Poulsen (discussant), Xian Wu (discussant), conference participants
at SIEM Big Data and Market Microstructure Conference, 9th SAFE Market Microstruc-
ture Conference, and seminar participants at Boston College for helpful comments. Emails
and websites: Lee e-mail leeso@ceu.edu, web sites.google.com/view/tomylee/home; Wang e-mail
wangchj@wharton.upenn.edu, web finance.wharton.upenn.edu/wangchj/; Zawadowski e-mail zawad-
owskia@ceu.edu, web sites.google.com/view/zawadowski/home. The usual disclaimer applies.
Tomy Lee Chaojun Wang Adam Zawadowski∗
September 29, 2025
Abstract
We identify a widespread practice that counteracts fragmentation in the corpo-
rate bond market. On modern trading platforms, traders can simultaneously
request quotes for many bonds from dealers, then trade against any subset of
the dealers’ quotes. Such List requests comprise 80% of all requests on Mar-
ketAxess, the largest corporate bond platform. Using the 10 million requests
on MarketAxess in 2021-2022 linked to List-level identifiers, we document that
traders substitute across bonds within the same List. Fifth of bonds in Lists
are abandoned without a fill. Within a List, a bond quoted the higher-ranking
spread is discontinuously more likely to fill than a bond quoted a nearly identi-
cal yet lower-ranking spread. Dealers intensively substitute within their Lists,
whereas passive funds typically fill every bond in their Lists. The modern bond
market evolved a simple mechanism to address fragmentation.
Keywords: Corporate bonds, fragmentation, multi-dealer platforms, List trading,
substitution
JEL Classification: G12, G18, G23, D47
∗Lee and Zawadowski are at Central European University. Wang is at the Wharton School,
University of Pennsylvania. We thank Gio Accurso, Julien Alexandre, and especially Sinem
Uysal at MarketAxess and David Krein for the data and invaluable discussions. We thank
Edith Hotchkiss, Thomas Poulsen (discussant), Xian Wu (discussant), conference participants
at SIEM Big Data and Market Microstructure Conference, 9th SAFE Market Microstruc-
ture Conference, and seminar participants at Boston College for helpful comments. Emails
and websites: Lee e-mail leeso@ceu.edu, web sites.google.com/view/tomylee/home; Wang e-mail
wangchj@wharton.upenn.edu, web finance.wharton.upenn.edu/wangchj/; Zawadowski e-mail zawad-
owskia@ceu.edu, web sites.google.com/view/zawadowski/home. The usual disclaimer applies.
I Introduction
Most corporate bonds do not trade on a given day, as the market is fragmented across
numerous outstanding bond issues. This fragmentation threatens to disperse liquidity
across economically similar bonds. Other markets standardize assets to mitigate this
threat. The corporate bond market does not, perhaps because issuing firms value
discretion in their financing terms. Could a mechanism other than standardization
overcome fragmentation in this market?
We document a widespread and simple mechanism that already does so. Rather
than requesting one bond at a time as in existing models of trade, on modern trading
platforms, a trader simultaneously requests quotes for often dozens of bonds from the
same set of dealers. The dealers may respond to all or some bonds, and the trader
may accept some or none of the quotes, possibly from different dealers. Traders can
thus simultaneously search for every bond she views as substitutes and select the best
quote among them, aggregating the liquidity that is otherwise dispersed across those
bonds. Such List requests comprise 80% of all requests on MarketAxess, the largest
corporate bond trading platform.
We empirically assess the hypothesis that traders submit Lists to substitute across
bonds using the 10 million corporate bond requests on MarketAxess in 2021 and
2022. Our unique access to List-level identifiers allow us to compare individual bond
requests within Lists, stripping away all trader-and-time-specific confounders. First,
traders face considerable uncertainty around their quoted prices. Well below half
of the variation in quoted bid-ask spreads is explained by List- and bond-level fixed
effects and future realized returns, which together is far more information than what a
trader could plausibly know at the moment of her request. Second, traders substitute
among the bonds they include in a List. Comparing similar bonds in the same List
1
Most corporate bonds do not trade on a given day, as the market is fragmented across
numerous outstanding bond issues. This fragmentation threatens to disperse liquidity
across economically similar bonds. Other markets standardize assets to mitigate this
threat. The corporate bond market does not, perhaps because issuing firms value
discretion in their financing terms. Could a mechanism other than standardization
overcome fragmentation in this market?
We document a widespread and simple mechanism that already does so. Rather
than requesting one bond at a time as in existing models of trade, on modern trading
platforms, a trader simultaneously requests quotes for often dozens of bonds from the
same set of dealers. The dealers may respond to all or some bonds, and the trader
may accept some or none of the quotes, possibly from different dealers. Traders can
thus simultaneously search for every bond she views as substitutes and select the best
quote among them, aggregating the liquidity that is otherwise dispersed across those
bonds. Such List requests comprise 80% of all requests on MarketAxess, the largest
corporate bond trading platform.
We empirically assess the hypothesis that traders submit Lists to substitute across
bonds using the 10 million corporate bond requests on MarketAxess in 2021 and
2022. Our unique access to List-level identifiers allow us to compare individual bond
requests within Lists, stripping away all trader-and-time-specific confounders. First,
traders face considerable uncertainty around their quoted prices. Well below half
of the variation in quoted bid-ask spreads is explained by List- and bond-level fixed
effects and future realized returns, which together is far more information than what a
trader could plausibly know at the moment of her request. Second, traders substitute
among the bonds they include in a List. Comparing similar bonds in the same List
1
