AxeTrading Focuses On Buy-Side EMS
AxeTrading, which provides fixed income trading technology, is focused on providing an execution management system for asset managers who are increasingly making prices and facing new requirements on providing evidence of best execution.
The firm launched in 2009 and now has customers across 13 countries in four continents. AxeTrader, its flagship platform, provides banks, broker-dealers and buy-side firms with an aggregated view of of fixed income liquidity including axes, runs and quotes from the electronic venues, messaging platforms and voice channels used by a client. The firm also provides clients with tools to support MiFID II, which comes into force in the European Union at the start of next year, and extends best execution requirements from equities into fixed income for the first time.
Dinos Daborn, co-founder and director of AxeTrading, told Markets Media: “We focused on providing one front end for clients to connect to a multitude of fixed income trading venues. Clients can also aggregate and normalise all their market data into one view.”
Daborn has more than 25 years in financial markets including roles at Citi and Bloomberg. Other founders are chief executive Ralf Henke, who has over 15 of years of experience building fixed income electronic trading solutions for companies such as at JP Morgan whilst he was managing director of iCubic, and Mark Watters, who worked at Bloomberg for 17 years.
“We then extended into helping financial institutions match buyers and sellers more efficiently through accumulating orders in an internal central order book,” added Daborn. “Clients can readily view all accumulated orders and then better manage the execution of these orders via multiple workflows.”
As banks have been forced to shrink their balance sheets by regulators, they have pulled back from market making and there has been a rise in all-to-all trading, with the buy side increasingly making, as well as taking, prices. A State Street survey of asset managers found that nearly half, 49%, expect non-bank institutions to increasingly provide more liquidity.
“The buyside needs a fixed income EMS to efficiently manage their execution across the many different fixed income trading venues including the new central limit order books,” said Daborn. “MIFID II will also require evidence of the efforts taken to achieve best execution which is automated in the EMS.”
In June this year AxeTrading received a strategic investment of €2m ($2.4m) from Illuminate Financial Management, the venture capital firm which funds fintech companies in capital markets that create change through providing solutions for cost, control, capital efficiency or compliance with regulations.
Mark Whitcroft, partner at Illuminate, said in a statement at the time: “With a strong and highly experienced leadership team, AxeTrading are well placed to solve key challenges for fixed income market participants today; liquidity fragmentation, regulatory compliance around MiFID II and the growing need to drive greater efficiencies across trading workflows. The investment aligns well with our vision of investing in firms with a developed product offering and a clear, validated use case.”
AxeTrading is expanding and is due to open its first overseas sales offices in Australia at the end of this month and has also added to its sales team.
Consultancy Greenwich Associates said in a recent report, Technology Transforming a Vast Corporate Bond Market, that the buyside is deploying technology that leverages data and analytics and enables investors to access new electronic and traditional sources of liquidity.
Kevin McPartland, head of research for market structure and technology at Greenwich Associates, said in the report that the buyside has accepted that electronic trading will be a key to navigating the 21st-century corporate bond market, and the sellside is coming around. McPartland predicted that the current 20% of investment-grade volume traded electronically will grow to one-third over the next five years and overall electronification of the market will be even faster.
“If providing buyers and sellers of corporate bonds with tools that allow them to trade with each other marks the first phase of the market’s evolution, gathering, analyzing and putting to work data is phase two,” added McPartland. “In coming years, we will see bond trading venues morph into data and analytics providers, with their liquidity pools as the mere foundation of the business.”
For example Algomi, the bond information network, this year acquired AllianceBernstein’s Automated Liquidity Filtering & Analytics to provide an aggregated picture of bond liquidity signals across multiple electronic venues, message platforms and direct dealer inventories and provide an audit trail of execution decisions with time-stamped data. Fund manager AllianceBernstein had created and developed ALFA as an in-house liquidity tool to provide aggregated real-time information on liquidity and trade intent.
Essentia analyses data to create behavorial “nudges” for fund managers' investment decisions.
With Adam Conn, Head of Trading, Baillie Gifford
The partnership will develop suite of U.S.-listed, physically backed, digital asset ETFs.
The addition of Essentia behavioral analytics solutions is an extension of Northern Trust Whole Office.
Upstart exchange has seen market share increase to near 4%.