AxeTrading aims to open an office in the US in the first half of this year as the fixed income trading software provider increased recurring revenues plus other fees by 75% in 2019.

Mark Watters, co-founder and chief commercial officer at AxeTrading, told Markets Media that 2019 was one of the firm’s best years. “Recurring revenue , plus other fees, was up 75% year-on-year as we gained larger clients,” he added.

For example, last year AxeTrading signed its largest sell-side customer, a North American bank.

AxeTrading launched in 2009 and initially focused on providing an execution management system for asset managers who have been forced to become less reliant on sell-side liquidity and are also increasingly looking to trade electronically.

Watters said: “We will expand in North America and aim to have a physical presence there in the first half of this year.”

The expansion in the US means that AxeTrading will have offices on four continents as it adds to its locations in Europe, Australia and Singapore. As a result of the growth, the firm hired Michael Hofer Steiner as head of global sales in October last year.

Geographical expansion

AxeTrading aims to expand geographically as electronic fixed income grows around the globe.

“In Asia the strong growth of electronic trading in fixed income is being driven by exchanges,” said Watters.

The Indonesia Stock Exchange appointed AxeTrading to provide fixed income trading technology for the country’s bond market in September last year. IDX said in a statement that the platform is scheduled to be completed in the first quarter of this year and is the first stage of the exchange’s development of the $217bn (€195bn) local bond market.

@AxeTrading enjoyed meeting #Indonesia #fixedincome #PrimaryDealers and presenting the new ETP to at invitation of @IDX_BEI pic.twitter.com/1lRd1sQ8b0

— AxeTrading (@AxeTrading) September 4, 2019

“AxeTrading was chosen by IDX through a strict selection process among other global prospective partners for its 10 years of experience in electronic trading and its expertise in the fixed income market,” added the exchange.

Watters continued that AxeTrading is in discussions with two other Asian exchanges about using AxeTrader, the firm’s flagship platform.

In South African Nedbank became the first bank to transact on the country’s ‘ETP’ government bond electronic trading platform when it launched in 2018. Nedbank and several other ETP participant banks used AxeTrader. Watters added that Nigeria and Kenya are also looking to boost electronic fixed income trading.

“Our technology is built on lean modern software which sets us apart,” added Watters. “We are in discussions with exchanges in Latin America, Europe and Asia who want to extend over-the-counter trading in fixed income, swaps and foreign exchange.”

IA Velocity

Last year AxeTrading was one of five firms who were successful in joining the second cohort of Velocity, the UK Investment Association’s innovation hub and fintech accelerator for the buy side.

“The IA have been fantastic in managing contacts with the buy side,” added Watters. “Our meetings have triggered conversations and accelerated the move to electronification in fixed income.”

Investors began widely adopting automated trading tools in fixed income last year and measuring their growth in the coming years will be incredibly important to understanding market structure changes according to Greenwich Associates.

*New* Top 10 Market Structure Trends for 2020 https://t.co/B43OSax5FK via @GreenwichAssoc pic.twitter.com/45K1Rki1JX

— Greenwich Associates (@GreenwichAssoc) January 6, 2020

The consultancy said in a report: “Furthermore, electronification of processes on the trading desk other than the execution itself – salespeople deciding whom to call, more efficient capital allocation, etc – will happen more quickly and have a greater impact on the market’s functioning going forward.”

Venue as a service

AxeTrading last week said it had connected to UBS Bond Port, the first time it has provided a venue as a service.

Nico Masso, global co-head credit execution at UBS Bond Port, said in a statement: “Building on our 35% year-on-year volume growth, we are delighted to welcome AxeTrader clients to the expanding UBS Bond Port platform.”

AxeTrading adds another #fixedincome #trading venue to its list of integrations: even more liquidity now available for clients of @AxeTrading though its integration with @UBS Bond Port
#fintech #innovation pic.twitter.com/yVeXrDWjYt

— AxeTrading (@AxeTrading) January 9, 2020

AxeTrading’s EMS clients will have access to the equivalent of $30bn (€26.9bn) of daily global liquidity in credit, rates and emerging market bonds and can distribute prices to other participants of the network on an anonymous basis.

“Connecting to UBS Bond Port is a milestone,” added Watters. “Bond Port only shows firm quotes and the trading counterparty is UBS.”

He continued that the connectivity was the first example of Axe Trading providing a venue as a service as the integration for clients was via the cloud. “This reduces onboarding time to a few days,” said Watters.

AxeTrading is already connected to 45 different venues but Watters said the firm will aim to connect to more specialist platforms.

The International Capital Market Association said in its latest quarterly report that it had 43 electronic execution venues, order management systems and information networks in its mapping directory of fixed income electronic trading platforms.

?The latest @icmagroup Quarterly Report is now available on our website ⤵️https://t.co/hNA58sPDXo pic.twitter.com/KVTByDPinX

— ICMA (@ICMAgroup) January 10, 2020

ICMA continued that four additional platforms were recently listed in the directory and there were four deletions as two non-execution platforms and two MTF execution platforms were decommissioned last year.

“This may indicate a relative saturation of competition in an increasingly difficult market for new entrant platform providers,” said the report.

Analytics

ICMA’s report said there is evidence of increased use of the transparency data produced by MiFID II requirements for analytics and new execution models.

“This follows the trend for platforms to increasingly leverage and enrich market data with the objective of providing the user with further insights to gain competitive advantages,” added the report.

In Europe MiFID II, which came into force at the start of 2018, extended best execution requirements from equities into fixed income for the first time. AxeTrader provides banks, broker-dealers and buy-side firms with an aggregated view of fixed income liquidity including axes, runs and quotes from the electronic venues, messaging platforms and voice channels used by a client.

Watters continued that AxeTrading will be forming partnerships with other fintechs in areas such as smart data analytics and algorithmic trading.

“We want to build an ecosystem with the best in breed in each market segment using modern open technology,” he added.