Bond Traders Get Liquidity Aggregation Tool

Terry Flanagan

Fixed income traders who spread U.S. Treasury cash and futures are the primary beneficiaries of a new liquidity Aggregator tool launched by Trading Technologies for its flagship X_TRADER platform.

The server-side Aggregator tool combines multiple liquidity pools of an asset, making it possible for users to easily view the aggregated market of similar instruments listed across multiple venues and route orders from the aggregated view based on predefined order-routing rules and configurations.

“This is going to be very powerful for basis traders, as now they can spread the aggregated Treasury liquidity against the CME Treasury futures using TT Autospreader,” said Sanju Varghese, technical product manager at TT, who is primarily responsible for exchange connectivity on the fixed income side. “Our users will be able to consolidate liquidity in a single X_TRADER MD Trader window. We’ll be able to route orders based on configurable smart order routing rules. All the spreading will be performed server-side, thereby reducing latency.”

TT recently announced its intentions to connect to KCG Fixed Income, and already has established connectivity to eSpeed, BrokerTec, and GovEx.

“We would like to provide professional traders with a consolidated point of access to the major fixed income markets,” Varghese said. “In the U.S. Treasury market, we already connect to BrokerTec, GovEX, and last year we provided connectivity to eSpeed as well. So, connecting to KCG is the natural next step to provide complete liquidity to our fixed income traders. Also, we have been receiving multiple customer inquiries about connecting to alternate liquidity pools, particularly KCG, so this step is a way to respond to our customer’s needs.”

He added, “We have a growing base of users spreading Treasury securities against futures, and these traders expect to see the best price in all the venues, so providing connectivity is very important.”

Varghese has been monitoring the CFTC’s Dodd-Frank rules, especially as they pertain to OTC products. “One area that I have been concentrating on is Dodd Frank and the changes that it’s bringing to the U.S. fixed income market. That is something that we are closely monitoring and seeing where we can add value to our customers.”

TT provides connectivity to Eris Futures Exchange and to CME for trading interest-rate swap futures.

“Over the last few years what we have seen in the fixed income side is a lot of the OTC market is moving to a central limit order book,” Varghese said. “So we have responded to that by providing connectivity so our customers can trade interest rate swap futures that are listed on Eris as well as CME. Right now, there are over a dozen venues that offer interest rates swap trading, so we are closely monitoring that avenue as well.”

TT is also close to launching its “next-gen” trading platform, simply called TT. All trades executed through TT will execute on proximity-hosted servers in the company’s co-location facilities. Today, X_TRADER is in eight co-located data centers globally, but the next-gen platform will target a total of 15 over the next 12 months. That number is planned to increase where demand warrants.

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