Buy Side Eyes Fixed Income Fragmentation

Shanny Basar

Asset managers are looking to manage the increasing number of trading platforms, liquidity tools and order types in fixed income and this could involve more sharing of liquidity between venues.

Jonathan Gray, Liquidnet

Jonathan Gray, head of fixed income EMEA at Liquidnet, told Markets Media: “We display on average over 1,000 axes from the buy side daily and the next step is to explore sharing liquidity with other venues. If our clients can achieve better execution if we share liquidity, then they should be able to do so.”

Liquidnet, the institutional trading network, executes corporate bonds but other venues specialise in other parts of the fixed income market.

A Liquidnet survey, Future Tech—Trading Bonds Post MiFID II, found that 86% of global asset managers are currently in the process of re-configuring workflows and 76% of respondents are focusing on the need for standardised connectivity throughout their workflows, as legacy technology makes the fluid flow of accurate data challenging.

“However, the overarching requirement for future fixed income technology will not be to replace existing technology, but to implement a flexible architecture capable of integrating with legacy technology as well as with future specialist innovation across the asset classes,“ added the report.

Gray continued that in the last three years Liquidnet’s fixed income pool has grown from 15 to 100 clients in EMEA, and over 300 globally. He said the pool of liquidity is averaging $3bn a day in Europe and $12bn in global credit.

“In the last six months we have introduced the new workflow of Virtual High-Touch,” Gray added. “Axes can be displayed and smart intelligence is used to allow the members to search for latent liquidity by sending targeted invitations.”

Liquidnet launched Virtual High Touch for fixed income in December last year, which is an intelligent execution workflow designed to augment the corporate bond trader’s decision making process and manage different order types through multiple liquidity search options across both dark and lit protocols. Virtual High Touch evaluates order characteristics, market data, liquidity conditions, and user preferences to suggest an optimal execution strategy for different groups of orders.

MiFID II requires the buy side to evidence how they have achieved best execution and Virtual High Touch automatically generates an electronic audit trail.

Constantinos Antoniades, global head of fixed income at Liquidnet, said in a statement: “Virtual High Touch is all about leveraging data and an intelligent execution framework to increase efficiency and help our members achieve their goals.”


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