The participation of non-bank firms and an overhaul in buyside behaviour are among the key factors needed if the liquidity crunch in fixed income markets, triggered by the withdrawal of major dealers, is to be solved, according to senior practitioners attending the FIA Futures and Options Expo in Chicago.

New capital requirements imposed since the financial crisis have made it more punitive for traditional dealers to hold fixed income inventory on behalf of clients, resulting in it being more difficult for investors to move in and out of their positions.