When the private, exclusive, invitation-only Alpha Trader Forum (ATF) fixed income meeting was launched in London back on 20th June 2013, the buy side addressed their lack of efficient electronic means to trade bonds. K&KGC volunteered to map out the different trading technology providers and summarise the buy side’s desired specifications which we subsequently helped to communicate to different technology providers in the market. Five years later, we are pleased to see that the buy side now have the efficient choices of brands and protocols for electronic bond trading. It is now up to the users to ‘start the dancing’, trusting and placing liquidity in the technologies that are made available.
The key take-aways from our recent ATF buy-side roadshow in May and June this year in Paris, Frankfurt and London are that the buy side are at large supportive of starting to place more liquidity in all-to-all trading technologies in 2018, especially but not limited to credit and illiquid bonds to unlock liquidity in these areas.
More onus is placed on the buy side trader than ever before adapting to the new market and they need more transparency, data and analytic tools to make better informed decisions linked to best execution. The fixed income industry is energetic with development, both by technology vendors and the buy side themselves, workflow automation and better pre-trade decision making tools.
One of the major challenges is that all this technology and informed decision making is dependent on data. Holistic, timely and structured data is now desperately needed to take the industry to the next level. Most buy side expect that ESMA will calibrate the liquidity definitions in response to MEP Markus Ferber’s explicit disappointment over the lack of real-time reporting of bonds in MiFID II.
Another major challenge is the juniorisation of the sell side and the lack of useful market colour and liquidity they can deliver to the trading desk. Evidently, K&KGC’s buy-side research clearly indicates the benefits for sell-side firms improving their service levels toward the buy side and investing in auto-quoting tools for better electronic interaction through multilateral trading platforms. K&KGC has, with the help of our buy-side trading community’s research participation, developed guidance for better due diligence of the counterparties.
K&KGC welcome more trading portfolio managers to join our private exclusive roundtable debates and research initiatives, together with our fixed income trading community, as the trading role is evolving rapidly and we would advise everyone to keep up with the changes.