Mostly… fixed income and cross product eTrading

February 18, 2008

A Single Platform

Filed under: 2015, etrading, Nuts and Bolts, OMS / EMS — holky @ 11:40 am

SIFMA Fixed Income eTrading Survey 2008 results show 85% of buy-side respondents expect to be using a single platform for all of their institution’s wholesale electronic trading activity within the next two years.

At SIFMA we heard that the future is not all multidealer venues. Indeed, singledealer platforms are still a serious consideration for the majority of attendees where there is a functional benefit.  We also heard that buyside do actively want competition in the ECN/vendor space – if only so the functional landscape does not stagnate.

So answering the question posed in Tales from a trading desk, buyside expectation and indeed their desire would appear that the single platform in question is not one of the vendor or dealer platforms, instead it is their own desktop (ie their single platform), and that this platform is able to aggregate their view of liquidity into a single view of the market, from where they trade. So OMS or EMS depending how you measure it.

My panel ( this one of the only snippets I heard 😦 ) concluded that 2008 is back to basics and so time for the foundational work to be done so we are ready to benefit from the new venues and landscape changes that the dealer consortia are driving.   In an environment where fixed income etrading budgets are broadly the same as last year (*), we need to be specific about where the right place to spend is. So in terms of back to basics, spend your 2008 money on the implementation of your OMS and then […through 2009] plugging it into the liquidity pools.  

Which pools do you connect to though? Well, once buyside have got the hang of plugging their OMS into fixed income liquidity pools, we’d be mad not to expect a much stronger drive from buyside and sellside to hook up direct in order to handle bespoke orderflow/information flow, or perhaps a move towards something more cross-product.  Sure, this is a relationship enhancer so perhaps only really relevant for top tier clients, but how long will critical mass of connections into say one of the fi venues want electronic order flow constrained in some way just to match what is possible via the venue’s GUI ?  Will those venues constrain the types or order that they can process, or will they move towards a more generic orderflow routing instead?  … though perhaps that’s a question for 2010 and beyond.

(*) assuming survey of SIFMA attendees is indicative of the market as a whole. The other options were that budget was materially less or materially more than 2007.

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6 Comments »

  1. A single platform – that’d be this…

    https://mostly.wordpress.com/2007/10/30/project-utility/

    Comment by John Greenan — February 18, 2008 @ 8:49 pm

  2. Note that Lehman were not a respondant for the survey-are they the onlt top tier IB without a solid electronic offering? They have some of the worst systems on €Govt debt and am I right that they only trade IRS over the phone?

    We should not be surprised that almost half of buy side trade 85% of products electronically-they are primarily concerned with arbitrage strategies.

    Depth of market would not have been on the top of the list of reasons for choosing a platform if were were in a traditional ‘liquid’ market-across bonds and IRD market makers are complaining that they are warehousing too mcuh risk.

    Buy side will cite volatility as a reason for trading electronically due to accuracy of price, speed and availability of liquidity; if RFQ produces a consistent price they will execute at market (they are not privvy to auctions and are not able to implement real prop arbitrage as they dont actually know where bonds should be trading).

    This post is too long already-SD

    Comment by Sodappa — February 19, 2008 @ 9:57 am

  3. […] Surface: View of Liquidity I see Mostly has answered my initial SIFMA question. Could “View of Liquidity” mean that “independent software vendors” will drive the sell-side API to become king […]

    Pingback by Trader Surface: View of Liquidity « Tales from a Trading Desk — February 20, 2008 @ 11:20 pm

  4. please contact me, i have something of interest for you

    Comment by oldtimer — February 22, 2008 @ 2:54 am

  5. […] …which doesn’t specifically mention electronic execution via these connections, but does put another foundation in place for a single platform. […]

    Pingback by The Future of OMS « Mostly… — July 17, 2008 @ 8:35 am

  6. Many firms, big and small, are turning to cross-asset trading and bringing the trading of two or more asset classes together onto a single platform for more efficiency, better risk management, better position reporting and viewing, and ultimately better returns. And that’s where you could see beyond equity into currency, options, futures, bonds and other asset classes.

    Multi Asset Trading Network on LinkedIn is a forum that allows you to discuss these and other issues involving cross asset trading.

    The intention is clear: To have like-minded people sharing whatever your main challenges or successes currently are.
    This is your chance to throw your questions out there and really get involved! I encourage you to post any discussions, news and articles that you feel would be useful and interesting for the group to know.

    http://www.linkedin.com/groups?home=&gid=2993625&trk=anet_ug_hm

    Comment by Paulo — May 21, 2010 @ 10:02 am


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