---
title: Bond Funds and Liquidity Provision
url: https://www.ml-quant.com/papers/ssrn/4614945/
site: ML-Quant (https://www.ml-quant.com)
updated: 2026-09-26
license: Summaries CC BY 4.0; links go to the original sources
index: https://www.ml-quant.com/llms.txt
identifier: SSRN 4614945
source_url: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4614945
featured: 2023-11-02
citations: unknown
topic: Trading, Microstructure & Execution
---


# Bond Funds and Liquidity Provision

Changes in regulations have moved profits from liquidity provision in the corporate bond market to mutual funds, increasing volatility and vulnerability to market disruptions like the COVID-19 pandemic.

- Source: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4614945
- Identifier: SSRN 4614945
- Released: 2023-10-23
- First featured: Quant Letter No. 24 (2023-11-02): https://www.ml-quant.com/issues/2023-11-02/
- Citations (Semantic Scholar): not tracked
- Published in: not yet
- Topic: Trading, Microstructure & Execution

## Related

- [Cross Trading Corporate Bonds](https://www.ml-quant.com/papers/ssrn/5263491/): The study finds that mutual funds often cross-trade in corporate bonds, which is beneficial during stressful times, but new regulations have reduced the associated cost savings.
- [Liquidity Dynamics in RFQ Markets and Impact on Pricing](https://www.ml-quant.com/papers/arxiv/2309.04216/): The article introduces a Fair Transfer Price concept for valuing illiquid corporate bonds using Markov-modulated Poisson processes and micro-price concepts.
- [Ponzi Funds](https://www.ml-quant.com/papers/arxiv/2405.12768/): The study suggests that investors' pursuit of high returns from active funds can predict ETF bubbles and crashes, and that a fund's liquidity can indicate its potential for inflated returns.
- [Aggregate Net Fund Redemptions and Liquidity of Stocks Holding](https://www.ml-quant.com/papers/ssrn/4609248/): Mutual fund investor withdrawals can adversely affect the liquidity of stock holdings, influenced by investor sentiment and stock returns.
- [ETFs vs Mutual Funds: Liquidity & Performance](https://www.ml-quant.com/papers/ssrn/4627766/): Liquidity & Performance: The study suggests that ETFs may not be more liquid than mutual funds and can be subject to short-term mispricing and illiquidity.
- [Optimal Entry and Exit Trading Points using Functional Data Analysis](https://www.ml-quant.com/papers/ssrn/4658652/): The study develops investment strategies using optimal trading points predicted by forecasting financial time series with intraday data on weekly data curves, showing superior performance in backtesting on three major US ETFs.
