How Bonds Change Hands – Inside the UK’s Secondary Debt Market

Not so long ago, if you wanted to buy or sell a bond, you picked up the phone, whispered a few numbers, and hoped the other side didn’t hang up. These days, the market hums digitally – faster, cleaner, quieter. But while the method has changed, the money, as ever, moves in mysterious (and legally enforceable) ways.

There’s something fascinating about how a few lines of code now move trillions in corporate debt each year. And now, thanks to a new deep dive from the International Capital Market Association (ICMA), we’ve got the clearest picture yet of how that silent machinery works.

Its European Secondary Market Data Report – H1 2025 (Corporate Edition) draws on MiFID II and MiFIR transaction data covering over 80 per cent of market activity – revealing who’s buying, who’s selling, and where transparency is (or isn’t) shining through.

So, how is the UK bond market behaving these days? Let’s take a closer look.

A Market That’s Grown Up (and Found Its Rhythm)

Corporate bond trading across the EU and UK reached €3.09 trillion in the first half of 2025 – up 11 per cent on last year. Not bad for a market more often associated with quiet efficiency than excitement. There were slightly fewer trades overall (down half a per cent), but the ones that did happen were bigger. The average deal size rose 13 per cent – fewer trades, but meatier ones. The bond market, it seems, has swapped fast food for a proper meal.

The euro still dominates trading, taking 62 per cent of the action. The US dollar follows with 28 per cent, and the pound comes in with a modest 7 per cent – small but still punching above its weight given the size of the UK market.

As for who’s behind the bonds, American companies lead the pack, with France, the UK and the Netherlands following closely. Banks and other financial firms account for the lion’s share of trading at 43 per cent, while industrial companies account for about 12 per cent, and energy companies close behind at 11 per cent. Together, they show where the real borrowing power lies.

The real shift, though, is how all this buying and selling now happens. Almost half of all deals (47.7 per cent) are struck on electronic platforms – digital matchmakers quietly pairing buyers and sellers at speed. The rest are still arranged the old-fashioned way: a call, a quote, and a moment of suspense before someone says “done”. Smaller trades tend to be handled online; the big, chunky ones still need a bit of human nerve.

So yes – the bond market has modernised. It’s slicker, faster and far more transparent than it used to be. The shouting’s gone, but the tension remains.

Who Actually Trades This Stuff?

Despite what the movies might suggest, the secondary bond market isn’t a shouting pit of traders waving bits of paper. It’s mostly screens, spreadsheets and a lot of precision. The main players are large institutions – investment banks, asset managers, pension funds, insurers and sovereign wealth funds – all moving serious sums for reasons that range from long-term investment to short-term opportunity.

Banks and broker-dealers act as market makers, quoting buy and sell prices and keeping liquidity flowing. Opposite them are investors – from cautious pension funds to fast-moving hedge funds – buying, selling or adjusting portfolios as prices shift. It’s measured, methodical work, but it’s the quiet precision that keeps the whole market running.

A growing share of this trading now happens electronically. Platforms such as Bloomberg MTF, MarketAxess and Tradeweb have become the new meeting places of the bond world, matching buyers and sellers quietly and efficiently. Even so, some of the biggest trades are still agreed over the phone – a few words, a held breath, and a deal worth hundreds of millions.

Once a trade is struck, it must be reported under MiFID II rules, giving regulators and the public a clearer view of what’s changing hands.  The actual settlement – the moment the bonds move and the money lands – happens through the major clearing systems such as Euroclear, Clearstream and the UK’s CREST. It’s a smooth, largely invisible process that keeps markets moving without anyone ever needing to touch a piece of paper.

How It Works, Legally Speaking

For all its digital polish, a bond trade is still, at its core, the transfer of a legal right – the right to future payments from the issuer. In English law, that right is known as a chose in action – a transferable claim that can be bought or sold like property.

Most UK corporate bonds are held in electronic form within clearing systems like those mentioned above. Legal title sits with a nominee or depository, while investors hold beneficial interests recorded within those systems. When a trade settles, the clearing system updates its records to show the buyer as the new beneficial owner – no paperwork, no physical delivery, just legal certainty achieved at digital speed.

That certainty rests on the reassuringly old-fashioned strength of English law. It underpins every link in the chain: defining ownership, enforcing contracts and protecting investors. It’s a structure that combines modern efficiency with centuries-old reliability – and it’s this that makes London such a trusted home for global debt trading.

Trading Structures and Documentation

When bonds change hands, there’s more than trust and technology keeping everything in line. Behind the scenes sits a web of conventions and documentation that ensures everyone’s playing by the same rules – or at least arguing from the same rulebook when they’re not.

Most secondary bond trades follow the ICMA Rules and Recommendations for the Secondary Market. These are the market’s unofficial constitution: they spell out how trades are executed, how settlement works, and what happens when someone forgets to deliver on time. They aren’t law, but they might as well be – the courts recognise them as market custom, and in finance, custom often carries the same weight as legislation.

For short-term funding, bonds can also be traded under repurchase agreements (repos) – arrangements where one party sells securities and agrees to buy them back later, usually at a slightly higher price. These are documented under the Global Master Repurchase Agreement (GMRA), which gives the repo market its shape and its certainty. Under a repo, title to the bonds passes outright to the buyer and then back again when the transaction unwinds – an elegant structure that keeps ownership crystal clear even when balance sheets get messy.

Settlement for most secondary trades follows a T+2 cycle – two business days after the trade date. Trade details such as price, the bond’s ISIN (its unique identification code), settlement date and counterparties are confirmed electronically and form a binding contract under English law. Those confirmations might look like routine data messages, but they carry the weight of a signed agreement – proof that in modern finance, even the smallest click can have serious consequences.

The Last Word

The ICMA’s latest report paints a picture of a market that’s quietly evolved. What was once a world of phone calls and favours now runs on code, clarity and a fair bit of regulatory scrutiny. Yet for all the new technology, the heart of the system hasn’t really changed.

Every trade still relies on something timeless: trust in the rules, faith in the paperwork and an almost British devotion to doing things properly. Bonds may have gone digital, but they’re still built on the same foundation that’s kept the market steady for decades – clear rights, firm contracts and just enough transparency to keep everyone honest.

The machinery has modernised; the principles haven’t. And in finance, that might be as close to comfort as it gets.