What were the key theme(s) for your business in 2021?
Fixed income trading went through something of a renaissance in 2021 after years of relative stagnancy, with electronification coming quickly to the market. Virtual trading environments continued and required shifts in how liquidity was sourced for asset managers, how traders interacted with their colleagues and how the banks themselves interacted with clients. As a result, our customers realized how critical their workflows are to connect risk, sales and trading functions so they can focus on optimal pricing, response times, execution quality and innovation.
What was the highlight of 2021?
2021 saw the close of the latest phase of fixed income electronification – where standard or non-complex workflows, strategies and types of trades that account for most market activity were automated. This created multiple new protocols, data sources, applications and tools to support electronification and the profitability and performance that accompanied it, which has been an exciting development for our market.
What surprised you in 2021?
The landscape was redefined, and the nature of liquidity changed. Innovation was a major focus – but interoperability was often missing, which left institutions to string together various pieces as part of their trading workflows. Financial institutions recognize that the work behind this hasn’t been the simplest or the most fluid, which presents many opportunities for improvement in 2022.
What trends are getting underway that people may not know about but will be important?
Financial institutions are now focusing on how to integrate tools and data – both internal and third-party – more directly into their trading workflows and leverage that intelligence to improve execution quality and decision-making. This is making them push their own developers and service providers to build with interoperability in mind, and emphasize open frameworks more than in the past to either protect IP or ensure stickiness. Banks and service providers will recognize the value of using existing software or data where trading activity is commoditized, and turn to custom, specialized or preferred applications for trades where IP creates a competitive edge.
Open technology, code and APIs will drive innovation during the next phase of market structure evolution. Openness gives many types of institutions the flexibility to shape their own workflows and business rules, on top of an ecosystem of interconnected products and solutions. The next stage of fixed income electronification will tackle some of the more complex instruments and trading strategies and create an even more open ecosystem that ultimately creates new pathways to volume and revenue growth. Frameworks and trading solutions that augment rather than replace human traders will give trading workflows much more power and potency, with less effort.
What are your customer’s pain points and how have they changed from 1 year ago?
Fixed income markets are unique and bring their own specific challenges based on the sheer nature of liquidity and the number of instruments that trade in different ways. Proliferation of new trading venues and protocols, new fixed income asset classes, increasing trading volumes and a constantly changing regulatory market structure are creating new challenges for our clients. Not dissimilar to what we saw in equities 25 years ago, it’s now about whether fixed income traders can adapt quickly enough to the need to automate much of what they’ve traditionally done manually. How can they marry human and automated workflows? These are companies that have a great deal of legacy technology built in-house, and they don’t want to completely brick it out– but now more than ever, they realize they need to bring in more modern technology. Automation will prevail and drive how customers trade and increase their productivity – but many of the most critical aspects of fixed income trading will continue to be built around human-to-human interaction.