Goldman Sachs Brings Algos to Fixed Income
Goldman Sachs has turned its algorithmic trading acumen towards the corporate bond market, reports the Financial Times.
The investment bank’s algorithm gathers publically available quotes and uses that data to provide a firm tradeable price to investors.
“Our trading desk receives thousands of inquiries every single day, and the Goldman Sachs Algorithm has allowed us to address these types of inquiries in a systematic and automated fashion that enabled our traders to focus more on more challenging situations,” Amy Hong, head of market structure strategy for global credit at Goldman, told the broadsheet.
Coming off a poor second quarter earnings in the credit market where it saw a 40% drop in bond-trading revenue, Goldman Sachs continues to ramp up its presence in the corporate bond market. The firm has increased the number of securities in which it is willing to quote by 200%. Later this year, the bank plans to expand into the junk bond market as well.
The firm plans to broaden its client base as well as its product offering to improve its bond trading revenue. The bank seeks to include more corporations and non-active managers, which it plans to approach with more cross-selling opportunities, said Marty Chavez, CFO of Goldman Sachs, during the firm’s second quarter earnings call.
We are “asking them how we’re doing with them, what’s working, what’s not, what they like to see more of and less of,” he said.
Algorithms have become more prevalent in the spot FX market.
QB’s Algo Suite for futures market trade execution is also being co-located to HKEX.
Breaking data silos is key to deploying automation beyond 'nuisance' orders.
They can be used on quantum hardware expected to be available in 5 to 10 years.
Streaming blocks change the basis of matching and price discovery so institutions can find new liquidity.