Portfolio trading or basket trading has existed in the equity market. However, it is harder to achieve in the corporate bond market since a lot of trading is done by phone. Big blocks of debt have been traded but each are done individually and by hand, which has made the process quite tedious.

With the emergence of bond ETFs, a new trading environment for those who want to buy and sell large chunks of corporate bonds without relying on credit derivatives has become more readily available.

“Portfolio trades are a low-cost, efficient solution for a lot of people,” Jason Brauth, a senior credit trader at Goldman Sachs, said in a note. “Ten years ago, we would have individually priced each bond in a bundle. Now we price the entire basket, like in equities.”

Investment banks like Goldman Sachs act as “authorized participants” in the ETF market, or intermediaries that manage the creation and redemption process that help ETFs reflect their underlying market or net asset value.

For more information on the fixed-income market, visit our bond ETFs category.