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Cash Bonds in Fixed-Income Trading

Article Quant Q&A · Author: J.E.Y
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Summary

In fixed-income trading, “cash” commonly means trading or holding the bonds themselves, such as Treasury, municipal, or corporate bonds. The term distinguishes the underlying securities in the cash market from related instruments such as bond swaps, futures, and options. A team described as working in municipal cash is therefore associated with municipal bonds themselves.

The explanation is a terminology clarification rather than a description of bond valuation or a trading strategy. It notes that brokerage or account requirements may apply to participants trading these securities, including qualified-institutional-buyer requirements in some settings. Those requirements depend on the account and context; the discussion does not specify a universal rule or provide detail on settlement, bond-market structure, or how cash bonds relate quantitatively to derivatives.

Key ideas

  • In fixed-income usage, cash usually refers to the bonds themselves.
  • Cash bonds include government, municipal, and corporate securities.
  • The term distinguishes bonds from related swaps, futures, and options.
  • Brokerage account requirements can apply, depending on the trading context.

Tags

Fixed income
Full text
# What does cash mean in the fixed income context?


# What does cash mean in the fixed income context?












In a job description, it lists the sub categories of fixed income products: cash, swap, futures and options. I understand what other three mean but what's "cash" in this context?

In another occasion I came across this term when I worked with "muni cash", which is a team having something to do with munibonds.

I couldn't, however, find "cash" as an asset class type in any fixed income text book.

please advise.

## Answer by Brian B (score 2)

https://quant.stackexchange.com/a/32584

Cash means taking possession (usually in a brokerage account) of actual bonds, such as treasuries, munis, or corporates.

Usually this is no big deal, but the brokerage may have requirements for accounts that trade cash, for example that you be a qualified institutional buyer.

## Answer by nbbo2 (score 0)

https://quant.stackexchange.com/a/32586

Among people who trade bond options or bond futures, the term "cash" or "the cash market" is used to refer to the actual bonds.

Shown in full with attribution under the source's licence. Licence: CC BY-SA 4.0 (Stack Exchange)

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.