A few weeks ago, a boutique asset manager called the iShares capital markets desk with a request to take a $248 million position in the iShares Barclays US Treasury Bond Fund exchange-traded fund. Because the boutique firm had never executed such a trade before, the cap markets desk helped the manager walk through the steps necessary to make the trade.

It was the first time the asset manager took such a large position in the fixed-income ETF, but it won't be the last, according to iShares officials. Indeed, a recent Greenwich Associates study of institutions' use of ETFs suggests that more and more institutional-size asset managers are making monster trades, without disrupting the bond markets, because ETFs trade on indexes rather than on the underlying securities.

"The ETF is an effective tool for institutions. Institutional investors are looking for liquid beta in a fast-moving market," said iShares managing director Loc Vukhac at a media breakfast in New York on Tuesday at the BlackRock headquarters. "You're seeing the democratization of the fixed-income world as trades move from the phone to an exchange."