Two of Wall Street's largest corporate bond dealers have automated how they handle smaller bonds.
Citi and JPMorgan in recent weeks closed down the teams on their corporate-bond trading desks that handle smaller sized bonds known as"odd lots."
Citigroup and JPMorgan both recently disbanded teams dedicated solely to trading small-sized corporate bond transactions, known as odd lots, according to people familiar with the matter. The teams dealt primarily with retail clients who typically deal in the smaller, less liquid bonds.
"We have significantly enhanced our infrastructure and trading capabilities to create a better experience for clients," a Citi spokeswoman said in a statement. Mike Nappi, vice president of investment grade corporate bond trading at Eaton Vance, told Business Insider he estimates 75-80% of trading on bonds under $1 million is handled by machines. Unless a firm is able to do a high volume of odd-lot trades — he cited Charlotte-based Millennium Advisors as an example — the profit margins are too thin to maintain a large human team.
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