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 Research Projects at the MPIfG

Automating Markets for European Sovereign Debt

Arjen van der Heide


 
The emergence of electronic exchanges and increasingly fast algorithmic trading have radically transformed financial markets in the past decades. Not all markets have been affected equally, however. Processes of automation and electronification have been much slower and less wholesale in markets for European sovereign debt than in equity markets. This project seeks to develop an understanding of the differential impact of automation by investigating the evolution of markets for European sovereign debt – markets that by many measures are somewhat special: governments are active participants in these markets, and their debt is a crucial part of financial infrastructure more generally, not only because government bonds serve as a reference asset for the valuation of other financial assets but also because they are “safe assets” that serve as collateral for short-term lending in the money market. By tracing the recent history of automation in three European sovereign debt markets (Italy, Germany, and the UK), this project investigates how key differences in market structure and state-finance relations have co-evolved with differences in the material infrastructure of trading. Project duration: October 2019 to September 2021.
 

 
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