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Bond pricing study 2022 – Pricing out the competition

Bond prices and yields are set very differently from equities. Bonds are traded from one dealer to another in the over-the-counter (OTC) market, without going through a central marketplace or exchange. The sheer number of bonds across various bond types, such as Treasury bonds, municipal bonds, and corporate bonds, makes it important for investors to understand how liquidity and availability of live prices can vary. Watch Vice President of Fixed Income Richard Carter and Director of Fixed Income Stephen Traugott as they lead a discussion on:

  • How Fidelity’s bond platform delivers competitive bond prices by aggregating thousands of live offerings from hundreds of different dealers
  • Fidelity’s Bid Wanted process, designed to increase liquidity by giving customers electronic access to live bid prices
  • Understanding bond trading costs and how Fidelity’s bond prices statistically outperformed1 those of certain competing firms analyzed in the latest 2022 Bond Pricing Study by Corporate Insight.

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1. Fidelity commissioned Corporate Insight to study bond pricing, available online, for self-directed retail investors from three brokers (Merrill Lynch, Morgan Stanley, and Wells Fargo) that offer corporate and municipal bonds for comparison to Fidelity's standard online pricing. The study compared online bond prices for more than 27,000 municipal and corporate inventory matches from February 4 through March 7, 2022. It compared municipal and corporate inventories offered online in varying quantities. The study found that, on average, the three online bond brokers were asking $15.14 more per bond. Corporate Insight determined the average price differential by calculating the difference between the prices of matching corporate and municipal bond inventory at Fidelity, including Fidelity’s $1 per bond markup for online trades vs. the prices offered online for the same bonds from the three brokers, then averaging the differences of the financial services firms. The analysis included investment grade corporate and municipal bonds only.

Minimum mark-up or mark-down of $19.95 applies if traded with a Fidelity representative. For U.S. Treasury purchases traded with a Fidelity representative, a flat charge of $19.95 per trade applies. A $250 maximum applies to all trades, reduced to a $50 maximum for bonds maturing in one year or less. Rates are for U.S. dollar–denominated bonds; additional fees and minimums apply for non-dollar bond trades. Other conditions may apply; see for details. Please note that mark-ups and mark-downs may affect the total cost of the transaction and the total, or “effective,” yield of your investment. The offering broker, which may be our affiliate, National Financial Services LLC, may separately mark-up or mark-down the price of the security and may realize a trading profit or loss on the transaction.

In general, the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk, liquidity risk, call risk, and credit and default risks for both issuers and counterparties. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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