Corporate Bonds

Question: bond secondary market trading?

Ask a question about bond trading in secondary bond market. Trader A from Financial Institution 1 bought some Corporate Bonds at an old premium price, sell those at a discounted price to Trader B from Financial Institution 2. The interest earned for Trader A might not offset the principle loss. Trader B then sell those same bonds to Financial Institution 3 at a new premium price, plus the interest earned, leaving Trader B a profit. All trading activities happened in secondary market (over-the-counter). The question is - why not Trader A directly sell the held bonds to Financial Institution 3 for a new premium price to get a profit? What is the cause for Trader A not getting profit but Trader B did?

Answer: Financial Institution 3 was not bidding when Trader A was asking. Supply and demand or a change in interest rates during the time between the two transactions.

The DTCC and Market Liquidity