Automation of Bond Workflow Increases
Fintech Nivaura has appointed Scott Eaton as its new chief executive to increase the deployment of its technology to digitize bond issuance while Liquidnet is aiming to electronify the entire life cycle of a bond.
Liquidnet, the global institutional investment network owned by TP ICAP, is launching a service to electronify workflow in debt capital markets for the announcement and trading of new issues in the European investment grade, high yield and emerging bond markets, and in the US, in emerging bond markets.
We’re excited to announce the launch of our Primary Markets offering, a first step in realizing our ambition to electronify the life cycle of a bond from end-to-end. Find out more: https://t.co/TiT1ksqmjo pic.twitter.com/KfhmuloCon
— Liquidnet (@Liquidnet) September 7, 2021
Liquidnet Primary Markets will be integrated into the firm’s existing fixed income trading application and will also be available to non-trading desk users, such as portfolio managers, analysts, and compliance teams, through a web-based portal.
Mark Russell, global head of fixed income at Liquidnet, said in a statement: “Liquidnet Primary Markets is an essential first step in realizing our ambition of becoming the first agency broker to achieve the end-to-end electronification of the life cycle of a bond.”
Liquidnet’s global head of Fixed Income Mark Russell, TP ICAP’s group head of Strategy Joanna Nader, and CEO of Agency Execution John Ruskin discuss the evolution of the firm and the new connectivity and trading capabilities brought by Liquidnet – https://t.co/6o4sLIfFVV pic.twitter.com/OqB5ID4O3c
— Liquidnet (@Liquidnet) September 6, 2021
Nicolas Breteau, chief executive of TP ICAP, said in a statement: “The creation of Liquidnet Primary Markets was market-led. In bringing our plans to life, we worked proactively and cooperatively with a wide range of buyside, sell-side, and other market participants, including data vendors and the OMS community.”
In August Nivaura appointed Eaton as to his new role replacing the fintech’s founder Dr. Avtar Singh Sehra, who has become president to focus on innovation and product development in capital markets automation technology.
Sehra said in a statement: “As we exploit our growth opportunities to the full, I will be concentrating on accelerating innovation and our product roadmap, while Scott takes the lead on running the day to day business and equipping us to scale up quickly.”
Eaton told Markets Media that he had been working as a consultant for Nivaura for three months before joining the company.
“I met Avtar and was smitten by his creativity and the the way he thinks,” said Eaton. “Nivaura is a business built on distributed ledger technology which is solving a real world problem.”
Issuing a bond can traditionally take between a couple of days to a few weeks for private placements and syndicated trades. Nivaura cuts that time down to a couple of hours by automatically extracting the negotiated terms and then instantly feeding that information into all the other documentation.
Eaton has three decades of experience in capital markets and financial technology. Between 2015 and 2018 Eaton was chief operating officer of MarketAxess Europe and he then became chief executive of Algomi, the fintech which aimed to improve bond market liquidity. Algomi was sold to BGC in 2020.
Before MarketAxess, Eaton was global head of emerging markets trading with UniCredit and held a variety of leadership roles in credit trading and structuring at ABN Amro, RBS, Deutsche Bank and UBS.
Eaton explained that his experience at MarketAxess will be useful as the firm used technology to increase electronic bond trading. At Algomi he was hired to change the start-up into a sustainable business and he will perform a similar role at Nivaura in increasing the commercialization of its product.
“I will be running the business and leaving the innovation to the very smart people in the technology team,” he said. “As a former bond trader, I know how attractive the type of digitization and automation that Nivaura can bring to primary markets will be to many banks, exchanges, and investors..”
Nivaura created the first DLT solution for bond issuance in 2016.
The firm partnered with the London Stock Exchange Group to develop the venue’s digital primary Flow platform. LSEG used Flow to price a $7bn syndicated multi-tranche and multi-currency global MTN programme across nine tranches in May this year – the first time that Flow has been used to conduct key transaction steps by deal parties in the issuance process. Eaton said the firm is looking to develop similar partnerships with other exchanges.
Our CEO @avtarsehra talks to @shannybasar from @marketsmedia on the recent successful multi – tranche / multi – currency MNT trade, in partnership with @LSEGplc (London Stock Exchange Group)https://t.co/OQesIIslec#capitalmarkets
— Nivaura (@nivaura) May 26, 2021
In June Singapore-based DBS Bank launched the first fully digital and automated fixed income execution platform, where issuers can directly connect with the bank’s dealer teams and investors using Nivaura technology. Eaton added that other banks, including in the US, would be targets for Nivaura.
Both deployments use General Purpose Legal Mark-Up Language (GLML), originally developed by Nivaura and supported by law firms Allen and Overy and Linklaters. The human-readable mark-up language is designed to be easily used by lawyers or other professionals without any programming experience so that legal documents can be captured.
GLML is governed by the GLML Foundation, an independent body of capital market participants, so that the language can become an open-source, universal data standard, and allow digital and workflow platforms to be interoperable.
Eaton said: “Nivaura has moved its GLML intellectual property to an independent foundation so that use can really explode, like FIX messaging.”
FIX messaging is a standard for the financial industry.
He has witnessed increasing electronificaton in the bond markets but said the industry is still in the early days of automation.
“There is nascent institutional take up and the network effect takes time” he added. “Rick McVey [chief executive and chairman of MarketAxess] used to say that the firm was a 20-year overnight success.”
A recent Barclays Global Fixed Income Markets Structure Survey found that over 60% of fixed income institutional investors do not have an execution order management system and less than half are looking to implement one by the end of this year.
The survey which canvassed central banks, asset managers, insurance companies and hedge funds, also found that less than 25% of respondents’ flow is executed using automation.