The TRADE 2022 prediction series: bond electronification

By 2022, two main themes will improve bond trading. The first concerns primary markets which, until recently, relied heavily on existing systems and manual processes. This year marked a breakthrough in the electronization of primary markets with the introduction of new technologies, allowing companies to trade new issues electronically and simplify both workflows and the dissemination of news data. emissions. This is the first step in achieving what the market wants, a complete, end-to-end solution between asset managers, their order management system (OMS) and syndicated banks, from issue to pricing and final allocation.

In secondary markets, where electronization is already well established, trading options will continue to expand, giving traders more choices to execute the right trade at the right time. This will be driven by better control of data and information so that buyers and sellers can route their cash to the most appropriate protocol. The combination of continuous electronic improvements in primary markets and the flexibility to execute a variety of transaction types, whether influenced by size, complexity or greater market conditions, will have a noticeable impact on the operation. fixed income traders.

– Mark Russell, Global Head of Fixed Income for Liquidnet

The industry has demonstrated that it can flexibly respond to changes dictated by the pandemic over the past 18 months, which has led to an atmosphere of possibility in fixed income trading. Market participants have shown that they are ready to adapt to new ways of working and will require more capacity to find and execute liquidity in 2022.

Certainly, a shift in perspective on what is possible in the bond markets when it comes to automation means that self-execution is increasingly accepted. However, the reality is that it has been around in specific regional markets for some time with demonstrable success in corporate bonds. There are banks that have successfully performed auto-execution on multiple trading platforms for over a decade, and it will be great to see this become more widespread in 2022.

– Roberto Cocchi, CEO, Soft Solutions

The pandemic has accelerated the adoption of e-commerce, and with it, there has been a greater appetite for innovation. Companies are looking for more ways to access liquidity, whether through new trading protocols or broad integration with solution providers like Bloomberg. Going forward, there will continue to be an increased demand for solutions that effectively use data to help inform business decisions and to overlay that intelligence through electronization and automation. An example of this would be our launch of the Portfolio Trading Basket Builder, incorporating a benchmark to Bloomberg’s Evaluated Pricing Service (BVAL), thereby enhancing our offering with the data and analytics for which Bloomberg is known.

Portfolio trading will continue to evolve as we see increased consolidation between list trading and portfolio trading as more market participants seek exposure to exchange traded funds (ETFs). and the underlying credit within those securities. It is an exciting time for e-commerce, as there is always a significant opportunity to innovate. Next year, market players can expect to see new products, protocols, and features that integrate data and analytics across workflows, and deliver greater efficiency pre-trade, trading, and after negotiation.

– Derek Kleinbauer, Global Head of Electronic Commerce Fixed Income and Equities at Bloomberg

Ongoing market pressures – low interest rates, rising fixed costs, increased regulatory requirements, or new competitors – mean that fixed income, commodities and currency traders will increasingly look for opportunities to do so. more, more efficiently, with the same resources.

This will lead many to consider new trading systems and platforms, especially those that can handle front to back trading in a thorough, yet straightforward manner. Speed ​​to market will remain increasingly critical. We will also see more new regulations with rather short implementation deadlines, or new deadlines of requirements piling on top of each other. Due to Brexit, additional reporting efforts will be made as UK and EU reporting requirements are no longer aligned, for example the EU’s Public Financial Disclosure Regulation (SFDR ) against the United Kingdom’s Regulatory Discipline (SDR) regime. This will highlight the importance of remaining flexible and well supported by technology that can evolve.

What does this mean for 2022? To stay focused on customer relationships and revenue generation, we would expect more emphasis to be on the right technology for the right job, which can be taken to scale. Investors will need to stay focused on their day-to-day work, as technology plays a larger role in supporting their needs.

– Alex Ehmann, Head of Asset Management Industry Sector at LPA

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