Bundling Trades in Over-The-Counter Markets

This paper documents trade bundling as a source of  relationships between dealers and their clients in over-the-counter markets. Using trade-level data on the near-universe of the Canadian fixed income market, we show that investors bundle a sizable fraction of their trades---within and across  asset classes---with the same dealer. This includes combining a group of buy or sell transactions, as well as bi-directional trading that involves swapping one asset for another. Data sets that focus on only one type of asset miss this aspect of trading, which we show impacts trading costs, providing monetary incentives for  trading relationships.