Enjoyed another excellent Fixed Income Leaders Summit catching up with friends and partners. Some clear signs of evolution, and here are our takeaways …
Data is the new “the”…it was in every sentence
🌐 Plumbing. Before traders can apply data to real life, they need to capture (market’s and their own), clean, access, and join it.
🌐 Public trade tape: A handful of capable providers are positioning to gain distribution share for the data that’s already being reported. Consolidated tape will probably be inexpensive, universally used, but delivered late (lawsuits aren’t helping). Not all welcome the transparency.
🌐 AI tools still mostly for PMs. It has helped to manage data lakes and accelerated some desk-level coding but still has limited application to the buyside trading process.
Trend toward cross-asset (for trading venues, data providers, EOMSs)
➕ No more one-trick ponies. Tech budgets, implementation bandwidth, desktop real estate, order packaging/hedging, process consolidation are drivers of demand for a single solution across bonds, swaps, FX, futures.
➕ Derivatives got more airtime. Mostly around process improvement for swaps. A panelist referred to potential “FXification” of IRS, including an eventual order book. Credit futures getting some traction but there’s still light takeup.
➕ Build or buy to be bulletproof? A huge fund manager said trading tech needs to be robust, and that most managers are not tooled to build enough for complex FI.
Push for workflow efficiency
⛓️ The streamlining spectrum: digitized–>e–>automated. Comfort, control, calibration are key to adoption of automation. The goal should not be to automate everything just to automate…traders have bigger jobs than that.
⛓️ Loving APIs. A couple of panels were dismissive of screen interoperability (had been a lot of buzz around that 2-3 years ago) to work across apps. Client demand is for robust APIs, and providers are becoming less dogmatic about screen eyeballs.
⛓️ Primary markets. Though 50% of NI IOIs are now electronic, there’s lots of frustration at the pace of bank adoption and venue coordination. Some managers have resorted to DIY tools.
Taking advantage of liquidity
🚰 Traditional banks have caught up to non-bank LPs in algos. One panel cited 16 EUR IG dealer algos (4000 bonds, up to 5mm)
🚰 More liquidity! (Kind of) More ISINs trading weekly (some attributable to the 16% of EUR IG now traded as PT), though one trader highlighted some big air pockets, despite broader ETF-driven uplift in market liquidity.
🚰 A trader’s job is to know how/when/where to trade. This is informed by data AND knowing PM intention. Healthy debate on how an outsourced trading arrangement buries those intentions.
FI market structure doesn’t change overnight, but it’s changing. Changing in a way that benefits tech-forward traders, and tech that’s purpose built for the way these markets work today and tomorrow. Good time to be at Adroit.