Trading Technologies Moves in London, Bonds
For clues on when and where to roll out new products or enter into partnerships, Trading Technologies pays close attention to the rules that its customers must comply with, and the frameworks they operate in.
“Making sure we’re staying abreast of changing regulatory environments, responses and follow-up is key,” said Jeff Mezger, senior product manager at Trading Technologies. “It’s also about keeping an eye on changing market structure.”
Last week, Chicago-based TT made three announcements, in the areas of electronic bond trading in the U.S., derivatives trading in Europe, and integrating order and execution management systems.
In fixed income, TT said it will connect with Nasdaq OMX’s eSpeed platform, which matches trades in U.S. Treasuries, a market whose daily turnover is estimated at $500 billion. Mezger said the connectivity will give TT’s bond-trading clients a better option for when trading and volatility is expected to notch higher in coming quarters, as the Federal Reserve tapers quantitative-easing programs and interest rates rise.
“eSpeed inarguably is one of the most important, biggest pools of liquidity for cash Treasuries,” Mezger told Markets Media at the Futures Industry Association conference in Chicago last week. “As the interest-rate and Treasury markets start to open up, we need to be able to give our customers access to deep liquidity, and make sure they have access to the best prices.”
The connectivity with eSpeed is expected to go live in the first quarter of 2014. “It fits really nicely into our existing product suite,” said Mezger, who heads up TT’s market-connectivity product offering. “We’re going to start with eSpeed, but then move on to adding the tools, the analytics, and the decision support that traders will need. We’re working on an aggregator to allow them to aggregate the cash markets and trade as if it’s one market.”
“We absolutely think this will move the needle” in terms of adding bond-trading business, Mezger said. “We have a good base of users trading BrokerTec, who are trading Treasuries or spreading against futures. This is going to be very important to them, as it’s going to make their strategies that much more effective because we’ll have different prices and different liquidity. There are other people who would spread the Treasuries against the futures, who didn’t look at us before because we didn’t have eSpeed…This will open the door.”
Across the Atlantic, TT plans to connect to the London Stock Exchange Group Derivatives Market early next year. This will enable TT customers to trade on Borsa Italiana’s IDEM derivatives market, Norway’s Oslo Børs, as well as some U.K. and Russian derivatives contracts.
“The European futures landscape is changing rapidly,” Mezger said. “You have CME Europe launching eventually; we’ll be there day one for that. You have the ICE-NYSE merger.”
The alliance with LSE “rounds out our European derivatives offering in general because now we’ll have access to all the major futures markets in Europe,” Mezger said. TT customers “will have access to every major futures exchange and 16 equity derivatives, for 16 major European economies.”
Lastly, TT has partners with Ullink in a project to integrate the former’s EMS with the latter’s OMS. “This dovetails with our multi-broker offering that we launched earlier this summer,” Mezger said.
“A trend with the buy-side customer is the convergence of EMS-OMS — will the best-of-breed model win out, or do we want an out-of-the-box product offering everything?” Mezger said. “We’re a firm believer in the best-of-breed approach. We think we have the best execution management system out there, and now with Ullink we can offer an integrated package solution.”