Fixed Income Traders Want The ‘Big Picture’12.19.2017 By Rob Daly Editor-at-Large
Fixed-income traders on the buy and sell side are looking for a single view when it comes to finding liquidity. And like works by Pointillist painter George Seurat, that image is being made by aggregating several smaller bits of liquidity.
Although the trend of aggregating sources may sound similar to the central limit order book model used by various fixed income trading venues, Brian Cassin, head of product and strategy, North America at Vela Trading Technologies views concerns over price discovery driving the model’s adoption within firms.
“It is not so much for them to have an execution venue right there, but to have transparency to where the liquidity is,” he told Markets Media.
Noting other markets that have adopted electronic trading, such as equities, derivatives, and foreign exchange, Cassin views the move a natural part of the fixed income market’s evolution.
“I think everyone sees the stone rolling down the hill and there’s no reason to try to stop it,” he added.
Technology in itself cannot produce liquidity; it can make locating existing liquidity simpler as well as provide access to trading algorithms and electronic execution services, which continue to grow in popularity.
“I guess they do they do not want to ramp up with more old-school sales traders, and they want to figure out ways to be able to capture liquidity electronically,” said Cassin.
However, many firms are finding their internal culture making preparations for the eventual rise in interest rates difficult at best.
“A lot of these banks want to make a move, but they do not want to be the first mover,” he added. “So there is so much inertia that does not allow them to move forward. Or it is something they know they want to do, but they just have not done it yet.”
Stephanie Dumont and Ola Persson of FINRA reflect on advances in fixed income transparency.
Investors lack confidence in fixed income data and believe only half is really reliable.
The consortium is creating the first open market electronic trading platform for syndicated loans and CLOs.
Buy-side users can access Tradeweb’s RFQ process while strengthening relationships with diverse dealers.
The Treasury is soliciting public feedback on additional post-trade data transparency.