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Corporate Bond Trading Costs: A Peek Behind the Curtain

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  • Paul Schultz

Abstract

In this paper, I use institutional corporate bond trade data to estimate transactions costs in the over‐the‐counter bond market. I find average round‐trip trading costs to be about $0.27 per $100 of par value. Trading costs are lower for larger trades. Small institutions pay more to trade than large institutions, all else being equal. Small bond dealers charge more than large ones. I find no evidence that trading costs more for lower‐rated bonds.

Suggested Citation

  • Paul Schultz, 2001. "Corporate Bond Trading Costs: A Peek Behind the Curtain," Journal of Finance, American Finance Association, vol. 56(2), pages 677-698, April.
    • Handle: RePEc:bla:jfinan:v:56:y:2001:i:2:p:677-698
    DOI: 10.1111/0022-1082.00341
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