Retail participation in a securities market improves the depth of the market and allows retail investors to balance their portfolios. However, the retail fixed income market in Europe is still nascent, with the exception of Italy, and possibly Spain.

In a new report, Retail Bond Markets in Europe: Market Potential and the Role of Regulation, Celent looks at the role of retail investors in the leading fixed income markets across Europe and examines ways in which participation can be encouraged.

There is potential for growth of trading. The following figure looks at the share of retail asset allocations in Europe of clients of intermediary distributors (insurance companies, private banks, retail banks, independent financial advisors, and funds of funds). Fixed income had a 32% share, following equity at 47%.

“Europe has a high level of indirect retail participation in the fixed income market, which needs to be harnessed to encourage retail bond trading,” says Anshuman Jaswal, Celent Senior Analyst and author of the report. “The success of the Italian market is a testament to the role fiscal incentives can play.”

The report begins by looking at the overall European market and considering the share of fixed income in retail asset allocation. Within this, the report considers the breakdown in terms of the share of government and corporate bonds. After taking a look at the European picture, the report goes on to address each of the leading markets: Italy, Spain, France, the UK, and Germany in turn.

The 30-page report contains 16 figures and one table.