In honor of Fixed Income Leaders Summit being in DC this year, I have chosen to indiscriminately Capitalize Words and use unnecessary Punctuation!! Themes from meetings, boozy/non-boozy conversations and the formal sessions.
📌 To all my equities friends: the credit markets are not a backwater. IG & EMEA corp notional e-trading percentages are now on par with those for govs/equities. So there.
📌 Now approaching…one of the last frontiers of e-trading. Not sure if this was driven by FILS or by true market sentiment, but there was a lot of emphasis outside of credit. Munis (18% e) and loans (legit e-trading) got airtime, but it’s noteworthy that mortgages were called out in 5 of the sessions I attended.
📌 Direct dealer connectivity is back on the radar, after a pretty passive 18 months on this front. Clients are demanding increased visibility/transparency to complement the powerful content on venues, and more dealers are seeing direct connections as a vehicle to do more business. 3 more dealers approached me yesterday to initiate trading APIs for our mutual Credit and Muni clients.
📌 With the rise of AI and better external tools that stitch together “yooge” volumes of disparate asynchronous data, on-desk market structure/quant resources can be more valuable than on-desk coders. Embedded partners who are part of the daily flow can more effectively help trading desks to quickly Interpret data and to drive tech change.
Takeaways
📝 Useful tips on shopping for investment software from the Maximizing Tech Adoption session: be clear when syndicating for budget (on the ask and on your ROI), trust but verify (salespeople will tell you what you want to hear; get a Demo on Short Notice and don’t let them off easy), make sure your partner can do Everything You Need (or has the vision & resources to do it soon), but start with a small POC (don’t try to boil the ocean).
📝 Multiple panelists highlighted the need for their OMS to be Contractually Obligated to allow connectivity with their chosen EMS, upon initiating or renewing an OMS contract. A large chunk of the (amazingly, 8 to 9 figure!!!) implementation cost of an OMS is typically earmarked for attempting to shoehorn complex cash & derivatives trading functions into a system fundamentally not meant for traders. We heard increasingly vocal pleas (bordering on Open Revolt) on the need for unbundling of OMS and EMS, and clients have begun to vote with their feet.
There are more tools out there than ever. But the consistent message I heard this week from the hedge fund and asset manager traders shopping for a full-service FI EMS is that there are fewer not more. Like now maybe 2 of us. And there’s only 1 Big, Beautiful EMS for those with a meaningful OTC derivatives book. Remember, a fixed income EMS is not the same thing as a USIG e-trading EMS.
Thanks to our clients and partners for another conference full of meaningful and entertaining discussions. We’re here for you.