The introduction of electronic trading platforms hasn’t done much to improve liquidity in the inter-dealer side of the Canadian government bond market, suggests a news paper a new paper from the Bank of Canada.

The research examines the impact of increased transparency, brought about by the introduction of three electronic trading systems, on the brokered inter-dealer market for Government of Canada benchmark securities.

Using the CanPX dataset for the two-, five-, 10-, and 30-year benchmarks, the paper finds some evidence of decreased bid-ask spreads for the 30-year benchmark in the months following the introduction of the electronic platforms. However, spreads are not significantly different in the pre- and post-transparency periods for the two-, five- or 10-year benchmarks, it reports.

Also, the price-impact coefficient, calculated using dollar value as a measure of order flow, decreased for the 30-year benchmark but is not statistically different for any of the other benchmarks.

“Overall, there is little evidence that liquidity improved or was lowered by the introduction of the electronic systems,” it concludes.