Zions Bank is improving its internal trading management system to bring the prices it offers on the 30-year Treasury bond closer to clients' bids. The bank's new bond matrix will for the first time include futures pricing to calculate where bid/offer spreads should be, according to Robert Knox, senior v.p. and manager of electronic sales and trading at the odd lot trader, which does trades of around $5 million or less. He works from Jersey City, N.J.
While Zions' bid/offer spread on the long bond is at about 4/32s, Knox would like to bring that down to 1/32. "We'd like to attract more people into this niche market, which is becoming more and more competitive," he said, referring to the electronic odd lot trading space. While larger banks do use similar systems, Knox declined to quantify how much more Treasury trading he expects to attract through the improved pricing. Zions plans to incorporate the new pricing offered through the bond matrix by the fourth quarter.
