Buyer’s Guide: Fixed Income E‑trading

The current landscape of fixed income e-trading is a function of the historical, two-tier, voice-dominated market structure and of the on-going regulatory changes that are making liquidity increasingly scarce. Historically, corporate and sovereign bonds and their derivatives were voice-traded. The development of trading technology for equities, listed derivatives and FX – and the electronification of trading venues – are the enablers of the shift toward e-trading in fixed income. In 2014, there is an overcapacity of trading destinations compared with the volumes traded. Additionally, post-financial crisis regulations, mainly the Basel III accords, shrank the balance sheets of the fixed income dealing investment banks. As a result, banks are moving away from principal trading toward an agency trading model, and they are increasingly seeking balance sheet internalisation opportunities.

This report reviews the systems offerings of seven leading vendors for fixed income e-trading technology. The vendor systems presented in this report were selected for their proven capabilities and because global and regional banks are, in many cases, already using these technology solutions in their fixed income trading activities. The analysis of vendor offerings is organised into six areas of functionality: connectivity; trading; pricing and risk management; sales-trading tools; e-commerce; and client tools.