ICE Bonds is in the process of developing two new trading components and expanding internationally after setting record  trading volumes for corporate bonds, municipal bonds and agencies trading in 2024.

Peter Borstelmann, president of ICE Bonds, told Markets Media: “We are in the process of developing two new components of our offering: a request for quote (RFQ) for mortgage-backed securities (MBS) spec pools and a spread-based click to trade (CTT) liquidity pool for corporate bonds.”

The spread-based CTT is being introduced in response to strong institutional demand according to Borstelmann, and builds on the success of ICE Bonds’ price-based CTT liquidity in municipal bonds and corporate bonds.

Click to trade offers the opportunity to increase efficiency by automating the entire trade cycle for odd lots. A buy side trader can access additional pre-trade transparency with access to CTT liquidity pools, evaluate potential orders against executable pricing, use a rules engine to validate orders, and have orders quickly executed with straight-through -processing. In contrast, when a trader sends out an RFQ to market, they have to wait for responses, and may need a specific number of quotes, an ‘acceptable’ price level, or a certain counterparty to respond before execution, which is a time-intensive process for smaller odd lot trading.

Risk Matching Auction

Intercontinental Exchange reported that trading on ICE Bonds reached a record notional volume of $212bn for corporate bonds in 2024, up 40% from 2023. In particular, volumes through ICE Bonds’ enhanced sweeps session-based protocol, Risk Matching Auction (RMA), increased by 100% in the fourth quarter of 2024 from the prior quarter and have risen over four-fold since the final quarter of 2023. The ICE Bonds RMA allows traders to efficiently upload their inventory of bonds and a proprietary algorithm then proposes potential matches between buyers and sellers of the same bond or list of bonds.

Borstelmann explained that in 2023 ICE Bonds brought in new talent to revamp and relaunch its RMA product by enhancing the algorithm, introducing new screens, and making the platform more user-friendly and web-based and said these improvements gave users greater flexibility and control over their experience.

The sweep initially started with one session per day and ICE Bonds focused on refining the experience based on user feedback. The platform transitioned to running two sessions per day as the team made enhancements and collaborated with partners to optimize the timing of each session. ICE Bonds now conducts multiple RMA sessions each week with 50 registered firms and the participation of more than 400 users.

RMA’s differentiator is that the sweep is a protocol that occurs at a point in time during a session that spans 30 minutes according to Borstelmann. As a result it is very targeted for dealer-to-dealer cycles to clean up risk and manage their risk profile.

“Through iteration and close collaboration with our partners, we reached a point where RMA was running on all cylinders,” he said. “While the sweep space is quite competitive, we have quickly emerged as the clear second option, following Tradeweb, who has been a well-established leader for some time.”

RMA currently operates for investment grade and high yield corporate bonds and ICE Bonds has had preliminary discussions on whether it lends itself to other asset classes.

Borstelmann said ICE Bonds is relaunching its volume clearing solution at the end of the quarter with new innovative features, allowing participants the opportunity to systematically trade more in the names of each session and manage or source risk more effectively.

“This enhancement builds on a legacy component, incorporating innovative logic that we believe will enhance the value proposition and set it apart from other session protocols,” he added.

Continuous Evaluated Pricing

The protocol uses ICE’s Continuous Evaluated Pricing (CEP) to propose a pricing level for the bonds, which traders can either affirm or reject on a line-item basis or in bulk, providing an efficient way to reduce risk exposure. Borstelmann described CEP as a powerful and effective product, and while ICE Bonds aims to make it a key differentiator within its liquidity network, the firm is also actively supporting its adoption across other platforms.

“Our goal is to establish CEP as the industry standard composite pricing source, ensuring its value is widely recognized and utilized,” he added.

There is also strong demand to integrate composite pricing alongside live, executable content, enabling traders and portfolio managers to make more informed trading decisions. Borstelmann gave the example of separately managed account (SMAs) often having mandates that require them to see both a composite price and an executable price as part of their investment guidelines.

“The growth of SMA accounts and the rise in fixed income ETFs are driving a shift towards smaller trade sizes, which is our bread and butter,” he added. “At the same time, institutional firms are increasingly recognizing that they can access better pricing and liquidity by leveraging our network, augmenting traditional round-lot activity.”

Municipal bonds

Municipal bond trading on ICE Bonds reached a record notional volume of $178bn last year, up 5% from 2023. Notional trading volume of agencies, or bonds issued by government-sponsored enterprises or federal agencies, rose by 20% from 2023 to a record $28bn last year.

ICE Bonds’ growth in munis has been driven by a concerted effort to expand the platform’s network, particularly among Institutional accounts, according to Borstelmann.

“We’ve successfully showcased the value of the depth and breadth of our liquidity and connected participants through our initiative to integrate our executable content upstream,” he added.

The firm sees significant greenfield opportunity in munis as the sector is still in the early stages of growth, with only about 15% of the market trading electronically according to ICE.

Growth strategy

Borstelmann said ICE Bonds continues to make progress around its strategy of integrating executable content upstream in third party OMS/EMS, portfolio and other trading venues.

“This allows a broader set of users to easily access, evaluate and act on our liquidity, seeing first-hand the value, depth and breadth of our offering, as well as the quality of our pricing,” he added. “This effort has already delivered meaningful results.”

For example, in August 2024 ICE Bonds and MarketAxess, the operator of electronic fixed income trading platforms, announced plans to connect their respective liquidity networks. The interaction between liquidity pools aims to enhance price transparency, best execution, and overall market liquidity for all participants through ICE Bonds’ retail brokerage and wealth management presence alongside MarketAxess’ institutional trading.

Rich Schiffman, global head of trading solutions at MarketAxess, said in a statement: “Our joint efforts are focused on providing access to deeper liquidity across municipal and corporate bonds and diversifying trading options for participants in our marketplace.”

ICE Bonds’ user base is predominantly located in the US but Borstelmann said there is continuing strong interest from foreign investors seeking access to US dollar liquidity.

“We have support for UK, Swiss and Asia Pacific customers and are working towards approval for European customers,” Borstelmann added.

The group expanded its ICE Mortgage Technology business segment with the acquisition of Black Knight in 2023. Borstelmann argued that ICE is fortunate to have access to extensive and unique mortgage content and believes it will eventually provide differentiated value in the trade decision making process.

“With our RFQ, we are just beginning to enter the mortgage space and see this as a valuable addition for our customer base given the credit cycle,” he added.

The U.S. mortgage-backed securities (MBS) market is on the verge of an electronification boom similar to the one that has transformed the trading of corporate bonds, U.S. Treasuries and other fixed income products according to Crisil Coalition Greenwich. The consultancy said in a report in February 2025 that MBS products represent almost a quarter of the average daily volume of U.S. fixed income trading but more than  three-quarters of trading volume is via phone or chat.

Audrey Costabile, senior analyst for Coalition Greenwich market structure & technology, said in a statement: “We expect a jump in MBS electronification in the next few years motivated by the same forces that have driven the e-trading boom in other products—efficiency, enhanced transparency and evolving TRACE reporting requirements.”