Secondary market trading for structured notes in the U.S. has historically been bilateral, and extremely fragmented, lacking a systematic, aggregated way to sell positions, and without the visibility to buy. To improve efficiency, interdealer broker TP ICAP Group launched an alternative trading system (ATS) in February this year to introduce electronic trading of U.S. structured products.

Robert Romano, head of structured products, Americas at TP ICAP, told Markets Media: “Our hope is that we structurally change how structured notes are traded and perceived in the US.”

He continued that U.S. structured notes have traditionally been viewed mostly as a buy-and-hold investment until maturity, but in other regions they are viewed as a tactical investment within client portfolios and in certain countries they even trade on exchanges.

For example, SIX Swiss Exchange launched a new trading segment, Structured Products with Extended Trading Hours, in December 2025. Trading was extended by nearly six hours from 08:00 to 21:45 CET to enable self-guided retail investors and other market participants to act on market developments more flexibly.

Sébastien Neukom, head structured products sales, exchange, SIX, said in a statement: “This extension makes it easier for self-guided retail investors in structured products to track U.S. markets and act on developments as they happen, enabling more informed decisions with greater flexibility and precision around market movements. For issuers, longer trading hours increase product visibility and potential demand, making the market more attractive while effectively enlarging it.”

The inefficiency in the U.S secondary market has been exacerbated as there has been an “impressive” increase of issuance with double-digit year-on-year growth according to Romano. In 2025 total issuance of structured notes in the U.S was roughly $225bn, but he said total outstanding volume in the market is anywhere in the range of $300bn to $350bn,

“Corporate and municipal bonds have seen an increase in electronic trading over the past 10 years, and structured notes deserve the same institutional treatment given their importance as an asset class in investor portfolios,” Romano added.

The main buyers of structured notes have historically been private wealth platforms including private banks, wholesalers, wealth management brokerages, and registered investment advisors while investment banks create and sell the products.

A private bank or large wealth management platform could hold thousands of structured notes in their portfolio on behalf of investors. An investor who wanted to sell that position prior to maturity had to go back to the issuer bank where the note was purchased, leading to an entirely bilateral market with just one liquidity provider, according to Romano.

As a result, the market has traditionally been voice brokered on the telephone, on Bloomberg chats and by email. Over the years, the industry realized that secondary trading was inefficient and a better workflow was necessary to alleviate desk resources and streamline the operation, according to Romano.

Electronic trading

“Some investment banks plugged prices into Bloomberg, and provided clients the ability to click and trade up to $25,000 or $50,000,” he added. “This did not solve the bilateral, illiquid, and fragmented nature of the market and is one of the main reasons for the launch of this ATS.”

The TP ICAP Fusion Structured Products Trading Systems ATS addresses liquidity fragmentation by providing a centralized order book, real-time request-for-quotes (RFQs), available market prices and firm offerings for issuer banks, distributors, wholesalers registered investment advisors (RIAs), and broker-dealers serving institutional clients.

The idea and need of a secondary market has been around for many years, according to Romano, and this initiative has taken just over two years from the initial idea to launch.

“When I arrived at TP ICAP, I believed this was the perfect time to offer an electronic secondary market to the structured notes industry, given the firm’s reputation and connectivity to both the sell-side and the buy-side as a neutral agency intermediary, as well as its expertise and long track record of hosting electronic secondary markets across asset classes not only in the U.S., but globally,” he said.

Romano argued that TP ICAP can aggregate liquidity from its existing institutional buy-side clients such hedge funds, asset managers, pension funds and insurance companies. The ATS will give them a window into a secondary market for structured notes and they may want to participate, even if perhaps only on the over-the-counter derivative component after the note trades.

He added that the majority of today’s secondary market executions consist of small tickets under $100,000 because structured notes are typically sold to high net worth individuals and retail clients. However, the launch of this anonymous institutional grade marketplace may lead to broader market participation such as from the institutional buy-side and market makers, which could incentivize larger ticket sizes to trade.

“Banks who sell structured notes could also use this platform to offset risk sensitivities in their trading books, offload stagnate inventory, or perhaps even purchase other bank paper with the goal to increase their pool of OTC derivative risk they offer to hedge funds via their risk-recycling programs,” said Romano.

TP ICAP has been actively speaking to the major buyers of structured notes over the past year. Now that the platform is live and the ATS filing has been approved by the SEC, Romano said those conversations are accelerating.

“We would like to onboard participants since marketplaces are made when there is volume and trading activity,” he added.