Mostly… fixed income and cross product eTrading

June 11, 2007

No More Innovation

Filed under: 2015, etrading, Nuts and Bolts — holky @ 10:48 am

Where etrading is just a ‘function’ to help sell a multi-function terminal such as Bloomberg or Reuters, I’d expect their development focus to be primarily on the functionality that can be used in sales pitch to get and keep terminals on desks NOW. 

As we’ve seen with Bloomberg, the easiest sales pitch will be electronic tools to replicate an existing manual process; yes some interesting tools such as Bid Lists, and new ‘markets’ such as Repo AutoEx, but if you dig into the headline these were initially just standardising the format of previously free-format MSGs used in everyone’s daily routine.   Sure, once everyone is using a standardised msg for their negotiation process, then plugging in the etrading piece behind the scenes to automate some of this is a damn sight easier than “selling” the soup-to-nuts solution from scratch.  But doesn’t running your development schedule on this bottom-up basis limit your ability to deliver true innovation in the etrading space?

I recall three years ago (?) Reuters presented their view of the fixed income etrading future; an offering where client had the ability to execute secondary FX (with same or another dealer) off the back of a FI ticket. Joining the dots between the different Reuters etrading offerings. But since the reality of RTFI came along they’ve been chasing Bloomberg on ‘retail’ autoex…  just trying to get into day to day FI trading workflows..  I recall no sight or official mention of that cross product portal or anything outside the scope of anything on offer anywhere else in the FI etrading space.

Do Reuters or Bloomberg have an etrading roadmap that goes further than next 12 months?  

Well even if they did then that’s all changed anyway, right?   If liquidity hub are now taking the focus and so driving or shaping the development of these offerings going forwards, then how different will the Bloomberg and Reuters offerings be in the fullness of time?  

Do we face a significant risk of stagnation in the fixed income etrading space?

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6 Comments »

  1. Holky, you know my views on this. Absolutely it is a big risk.

    Comment by waratah — June 11, 2007 @ 12:03 pm

  2. Customers are going to define this space. Exchanges and IDB’s will continue to fall to pressure of hedgefunds. Customers will continue to meet customers via these venues. The expertise and technology continues to go from HF to Asset Managers. Heck Asset managers are now learning the differences between OMS and EMS just like in equities. Hedgefunds are paving the way; product by product, getting access to the IDB markets. HF are making markets, providing liquidity, and profiting. The street has to get off its lazy and start to trade again. Gathering inside the walls of LH or other “consortium” will not work this second time around (first time TW, BTEC, etc 99-02). Oh yes for GS though it will be a windfall because they organized these new consortium (we all want to be like and with GS), are in at ground level, and will be the first to exit by bringing the new consortium businesses to market. It’s kinda like watching a Merry Go Round. Watch for GS to innovate something outside of this silly box, or outside of the amusment park, just after they cash out of these platform investments. Or did they just get lucky with SLK and REDI?

    Comment by lacidar — June 13, 2007 @ 2:10 am

  3. Not sure Lacidar, I hope customers do drive for innovation, but recent history tells me that customers get what they’re given by Banks/ECNs. The main reason so little HF FI business is done electronically.

    The GS point reminds me of the old saying “if you’re in a poker game & 30 minutes in, you haven’t worked out who the patsy is, it is you!”. Perhaps in the consortiums there are several e.g. 14 in LH?

    Comment by waratah — June 13, 2007 @ 7:47 am

  4. Fantastic saying waratah! Very funny.

    Customers always get what they want. It may take 10 years, but they get what they want. I can list the cases in the Financial services industry. I won’t for now. Maybe for a book perhaps. I think the FI game changes dramatically in about 1 year or so. The Hedge Funds are all gearing up. The leak in the dam is MTS, BTEC, ESPD with more FI DMA coming. Just watch to see where GS puts its next dollars. That is if the whole market machine holds… the vols are bubbling… this might change a few things on its own as well.

    Comment by lacidar — June 15, 2007 @ 1:17 am

  5. Fair point, I’m a bit impatient I guess.

    Comment by waratah — June 18, 2007 @ 10:28 am

  6. http://www.parkparadigm.com/?p=250

    Comment by waratah — June 20, 2007 @ 12:39 pm


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