According Reuters, fixed-income investors are feeling the pressure of new capital requirements designed for banks. As a result, they are turning to dealers for liquidity.

Dealers are focusing more of their activities on their largest clients as they shrink their balance sheets and as trading margins for fixed-income instruments come under pressure, Greenwich said. Smaller funds, as a result, are struggling more to complete affordable trades.

"Stricter bank capital requirements have drained liquidity from the U.S. fixed-income market," Greenwich said in the report, saying that 85 percent of its respondents cited reduced market liquidity as among the most important issues faced this year.