About four years ago, the index division at Standard & Poor's undertook research into the fixed-income market. It sensed a conflict of interest that an independent index provider might be able to set right.

Global index vendors such as S&P have always been equity market players, because they can easily obtain the necessary data to calculate prices from the exchanges. Bonds have always resisted their entreaties, because prices are set by broker-dealers in a private market.

This is why it's the brokers who have dominated index-making for fixed income, notably Citi (thanks to Salomon Brothers), JP Morgan, Merrill Lynch and Lehman Brothers (whose famous aggregate indices are now owned by Barclays Capital).

But S&P went ahead because it believed that investors, mindful of their fiduciary duties, would see a conflict of interest in using index data from the same broker that executes their trades. "As it turned out," says David Blitzer, New York-based managing director and index-committee chairman at S&P, "no one was worried about too many hands in the same pot."

The idea of equity index vendors taking brokers head-on to create and manage bond indices went nowhere. But they have enjoyed a few modest successes on the fringes, and they are wondering if the financial crisis might have jarred the door open a little more.

In the US, S&P has been the most active in finding niches in fixed income. It has a US municipal bond index, and a series of indices tracking credit default swaps (or more accurately, of companies that trade CDS, from which it derives a CDS weighted average). It also has an index tracking 100 loan portfolios of large banks. In conjunction with Citi, it has launched an index of international Treasury bonds.

Other equity index providers are also playing on the margins; for example, MSCI Barra has some credit spread indices as well as a currency index, but it uses data from Barra to create these. Dow Jones Indexes, meanwhile, has partnered with Citi to create an index tracking sukuk, for the Islamic market, and is in the process of developing some Latin America-focused bond products.

Executives at these firms say they continue to put resources into figuring out fixed income. The crisis may create new opportunities.

"Our presence in fixed income is limited because of the availability of pricing data," says Deborah Yang, managing director at MSCI Barra in Hong Kong. But she notes now, with so much talk of over-the-counter instruments migrating to exchanges, "There could be a role for us."

Sumeet Nihalani, Asia director at Dow Jones Indexes in Singapore, says the firm is developing in-house capabilities for fixed income, with an eye to beleaguered banks perhaps deciding to outsource some of their index calculations. So far this hasn't happened. But another opportunity could come if more pension funds move towards multi-asset mandates, or offer employees lifecycle or target-dated pension products. This would necessitate the combining of equity and bond components, tracking uniform spaces.

Bonds are destined to remain niche products for the traditional equity index vendors. But the decline in market valuations, as well as in opportunities to customise or license indices for new products, means they are casting about for ways to grow their business. The fixed income world is difficult, but big and roomy, and the brokers that dominate it are on the defensive. Watch this space.