The Impact of Structural Embeddedness on Perceived Trust on Alternative Trading Systems, Trading Cost, and Access to Information in the Fixed-Income Market

The fixed income (FI) market is a financial market where debt securities are traded commonly in the form of bonds. Unlike equity securities which are traded on exchanges, the debt securities are primarily traded in over-the-counter (OTC) markets. While the use of electronic trading systems in the fixed income market is growing, the majority of the FI market is still driven by broker-dealer relationships with traders heavily relying on the phone-based communication for their trading. The concept of embeddedness has been used in several studies to explain the economic behavior and emergence of social relations in organizations. This research-in-progress is guided by these questions: What is the extent of embeddedness in the fixed income market? What is the relationship between a financial institution’s embeddedness and its trading cost and access to privileged information? What is the impact of a financial institution’s embeddedness on its perceived trust on alternative trading systems and the telephone system?