Mostly… fixed income and cross product eTrading

May 16, 2008

Covered Bond Platform

Filed under: etrading — holky @ 10:51 am

Finextra tells us that Six companies – Icap, TradeWeb, Eurex, MTS, BGC Partners and Bloomberg – are bidding to provide a new electronic trading platform for European covered bonds. Of course the devils in the detail with regard to the winners mandate, but if the punchline is a single platform, with no bridging connectivity to/from other execution venues/platforms, then aren’t the losing bidders going to argue same argument as was put against MTS being the single EGB venue?

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8 Comments »

  1. Enough with the platforms. FIX all the way. Platforms = another layer of complexity that generally adds no value. Less platform lock in and less fuss….

    Why do people even push platforms? Perhaps it’s because the OMS (where all this stuff should go) is generally too slow moving and unable to handle lots of real time data…

    Comment by John Greenan — May 19, 2008 @ 7:47 am

  2. A step backwards for mine.

    So every sub-asset class in FI has its own platform? Stupid.

    Anyway I think your old shop is well behind this one Holky…..and probably Goldman! 🙂

    John, I think “Perhaps it’s because the OMS (where all this stuff should go) is generally too slow moving” hits the nail on the head.

    Comment by Waratah — May 23, 2008 @ 2:56 pm

  3. or is it because the platform vendors see an innate value in having their desktop real estate on a traders front end.

    A lot of them probably see the decomissioning of their platforms as turkeys voting for christmas.Take that away and its harder for them to distinguish themselves from their competitors and lowers the barrier to entry for other counterparts.

    Possibly, the more ambitious amoungst them want to keep their platforms so they can move into the OMS space themselves?

    Personally, I’d prefer straight FIX connections, but I suspect theres too much at stake for this too easily happen.

    Comment by oxymoron — May 24, 2008 @ 10:48 pm

  4. Yeah, I agree, ” decomissioning of their platforms as turkeys voting for christmas”. But I still eat Turkey every christmas – why? Simply because I could not give a damn about what a Turkey wants. I shop, I pay, I eat Turkey.

    Also, yes, I agree, these firms want desktop real estate. But there’s only so much room to go around so I think it’s becoming clear that on that front, we want less clutter on the desktop and more clarity.

    My point (obviously) is that I don’t care about the firms that want to distinguish themselves by barriers to entry. Add value by tight spreads, excellent STP, low fail rates, customer service and research. Try and lock me in and I will do my best to walk away.

    I cannot imagine that any of the EMS/platform vendors can really push themselves into the OMS space. I mean, would you want to take on CRD and LZ in a space where they can sell at zero cost just to screw you over?

    Comment by John Greenan — May 27, 2008 @ 8:47 am

  5. I agree, but that argument has been around for a while now and, to my knowledge, Tradeweb, Bloomberg, Market Axess etc are not available as pure FIX connections.

    Either the rhetoric isn’t working, or those platforms are stickier than we believe.

    ‘I cannot imagine that any of the EMS/platform vendors can really push themselves into the OMS space. I mean, would you want to take on CRD and LZ in a space where they can sell at zero cost just to screw you over?’ Theres been some comments on this very blog to the contrary.

    Comment by oxymoron — May 28, 2008 @ 5:28 pm

  6. Oxymoron – indeed, Bloomberg, MarketAxess and Tradeweb are all platforms where you cannot bypass and go straight FIX.

    They are sticky because they are all pretty good as trading tools, so the dealing desks at buy-sides don’t moan too much, but from the overall firm-wide perspective they are inefficient since the “man-in-the-middle” wants to get paid.

    I know (and I am sure you do as well) that some EMS vendors are pushing into the OMS space but when you look at what a buy-side OMS does it’s a pretty broad product
    modelling
    model generation
    compliance
    reporting
    datawarehouse / ETL
    routing to internal desks
    FIX connectivity
    connectivity to middle and back offices
    etc…

    There’s a heck of a lot there. At a rough guess – an EMS such as Portware, Flextrade, Fidessa EMS (not the whole thing), ITG Triton will offer about 10% of the functionality of an OMS plus another 10% extra value added. Building out the other 90% is a nightmare task – it’s a death march project.

    Hence my proposal to the likes of Thomson or any other firm with deep pockets (say, GL Trade, LSE, NYFIX) to invest in a strategy to buy up the products then integrate. Building an OMS right now is not a winning strategy in my view. But markets flourish based upon differences of opinion, so more power to you Sir!

    Comment by John Greenan — May 29, 2008 @ 10:08 am

  7. Euroweek says BGC, BTEC, Tradeweb are the only three left in the race to be the covered bond *platform*

    Comment by holky — June 3, 2008 @ 6:46 pm

  8. Ummm, last time I checked (which admittedly was 18mo or so ago), covered bonds were, umm…. bonds. What genius came up with the idea that you needed a dedicated platform. Next thing you know, NYSE will open a new exchange just to trade biotech shares…

    Reminds me why I left this all behind!

    Comment by Sean — June 16, 2008 @ 5:23 am


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