Future Strategies For Inter-Dealer Brokers
The current market is dominated by five inter-dealer brokers (IDBs). While the voice-broked interbank market dominates the revenue pool, it is also the least profitable.
IDBs face changing markets, margin compression and challenges from market trading. We suggest three strategies: (1) build the first fully electronic rates platform; (2) build product-specific networks with balanced flow and illiquid products; and (3) focus on higher-margin businesses.