Australian banks are proving to be a pillar - or maybe a lackey - of global financial markets at a time of capital rationing in international banking.The Bank for International Settlements on Friday highlighted that "Australian banks have been raising both sovereign and corporate bond net positions," - holdings that chew through capital.The BIS was drawn to highlight the portfolio position of the Australian industry in the context of the considered and pronounced decline in the bond holdings of many key names in fixed interest.US primary dealers "continued to reduce their corporate bond inventories over the past years," the BIS wrote in a report on fixed income market liquidity."Since the beginning of the year 2013, they have cut back their net positions in US Treasuries by nearly 80 per cent," the BIS said."During the same time, dealers in India have also curtailed their corporate bond holdings, following the earlier decline observed for their government securities portfolios during 2013, which includes the 'taper tantrum' episode," it said.The BIS said dealers had "continued to lower their market-making capacity and willingness in many jurisdictions, focusing on activities that require less capital."Algorithmic trading was also singled out as a factor in "greater fragility in liquidity conditions."The trends considered by the BIS "potentially imply upward pressure on trading costs and, ultimately, higher costs of financing in primary markets."