Customer Liquidity Provision in Canadian Bond Markets

Corey Garriott and Jesse Johal

No 2018-12, Staff Analytical Notes from Bank of Canada

Abstract: This analytical note assesses the prevalence of liquidity provision by institutional investors in Canadian bonds. We find that the practice is not prevalent in Canada. Customer liquidity provision is more prevalent for less liquid bonds, on days when liquidity is already expensive or when there are larger trading volumes. In our interpretation, Canadian dealers draw on customer liquidity as a supplementary source of liquidity and only when necessary, given its cost. Classification-JEL: G, G1, G14, G2, G20, L, L1

Keywords: Financial Institutions; Financial markets; Financial system regulation and policies; Market structure and pricing; Recent economic and financial developments (search for similar items in EconPapers)
Pages: 8 pages
Date: 2018-05
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Citations: View citations in EconPapers (2)

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