The evolution taking place in fixed income markets has laid the foundation for the recent growth in credit index futures, positioning 2025 as a pivotal year for further proliferation of the product and broad adoption by the market. Advancements we’ve seen in market infrastructure, such as the electronification of trading, real-time bond and ‘liquid’ index pricing, as well as enhanced analytics on Terminal to compute fair value and identify relative value opportunities, have transformed how buy-side firms are managing and trading credit risk. These trends will continue, enabling greater price transparency and standardisation of this market which, historically, aids in the development of exchange traded products like credit index futures. 

The existing contracts provide broad-based exposure to the European, US and emerging market corporate bond markets utilising Bloomberg’s fixed income benchmarks. In 2025, we envision an expansion of this global credit futures complex, allowing investors to target regional credit markets and specific risks such as duration, sectors, or credit quality, providing a more diverse range of tools for those seeking local exposure and precision. This will lead to increased cross-margining opportunities with correlated products, amplifying the utility and cost-effectiveness of the product. 

For global credit, we enter a year of uncertainty in 2025, with resilient corporate fundamentals and potential easing of monetary policy offset by ongoing geopolitical tensions. Investors will continue to find value in a flexible credit vehicle that can be used to deploy capital quickly, express a tactical view or hedge corporate credit exposures. The product will continue to attract a diverse range of market participants, from asset managers to insurers, looking for narrow bid-ask spreads and tight tracking to the benchmark. We expect further normalisation of credit index futures as a core instrument in credit markets.

Charlie Campbell-Johnston, head of automation, international, Tradeweb 

The last few years have thrown fixed income traders one curveball after the other, and automation has proven itself as an effective tool to deliver scalability and time efficiency across different products and through a range of trading protocols. On the other hand, systematic and cross-asset funds have used automation to create new trading activity and realise new strategies. 

The game, however, could change in 2025. A combination of technological innovation and high-quality data would enable traders to adapt their automation parameters to actual real-time market scenarios, giving them even more control over the trade execution process. After all, automation has already transcended its operational efficiency origins and this evolution would cement its hard-earned place at the core of a dynamic and innovative execution desk. 

Tucker Dona, head of business development, Baton Systems 

We are one-year away from the mandatory central clearing of US Treasuries, which is going to have a material impact on the way that firms post margin for this product. Firms wanting to offset the impact of higher margins need to spend 2025 making operational changes and upgrades to optimise their systems for trading and clearing US Treasuries. However, there is still more clarity needed on which CCPs market participants will choose to clear these products, and which model participants will use, such as sponsored or done-away. Thankfully, much of the operational preparation and workload can be done efficiently with support from vendors providing direct connectivity into the CCPs.

If firms are not able to efficiently optimise and mobilise available assets across the range of CCPs they will use for clearing US Treasuries, they are going to face operational and cost challenges. By using data-driven insights to select the most eligible and opportunistic collateral for the different clearing venues and then being able to execute all movement instructions, firms can manage the higher margin levels more effectively. They will also be able to reduce associated costs, and more efficiently manage better their collateral usage and its impact on available liquidity. 

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By leveraging Broadridge’s Securities Finance and Collateral Management (SFCM) solution, FAB will be able to bolster its coverage of global fixed income and equities markets.

The development comes as part of the bank’s drive to expand securities lending in the UAE and wider Middle East.

“This collaboration caters for the growing demand for securities lending and borrowing within the Middle East and is aligned both with local regulatory needs and with international best practices,” said Darren Crowther, head of securities finance and collateral management at Broadridge. 

Broadridge’s provision of its SFCM platform — the first AWS SaaS deployment in the region — demonstrates a renewed focus in the Middle East and indicates readiness to support FAB’s strategic goals, the firm said in a statement.

As FAB navigates the evolving landscape of securities borrowing and lending regulations in the region’s markets.

The collaboration is also expected to yield new opportunities and efficiencies for FAB that will benefit clients across the globe – particularly as it navigates the evolving landscape of securities borrowing and lending regulations in the region’s markets.

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By leveraging proprietary data from the MarketAxess trading platform, TraX market data, and public sources such as TRACE, CP+ claims to go beyond traditional fixed income pricing sources to deliver value across the investment lifecycle.

Through the expansion of coverage, MarketAxess clients trading munis will benefit from accurate and unbiased reference pricing for the MSRB-reportable municipal bond market.

“We are excited to see the difference the introduction of real-time, AI-powered algorithmic pricing can make to a historically fragmented market like municipal bonds,” said Julien Alexandre, global head of research at MarketAxess.

“Our award-winning models excel at extracting pricing signals from multiple data sources, which is crucial in munis where trading is known to be sporadic.”

Initially introduced in 2017, CP+ is a data input and pricing source for multiple MarketAxess trading protocols and solutions, including Auto-X and portfolio trading.

“The muni marketplace has seen notable e-trading growth in recent years, and we believe innovations like CP+ with real-time, actionable data for [roughly] 930,000 municipal bonds will not only increase transparency and efficiency, but also the speed of adoption for electronic trading,” said Daniel Kelly, head of municipal securities at MarketAxess. 

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For trading desks, the new rules will result in a range of operational and regulatory shifts. Clearing obligations will become stricter, with enhanced oversight of margin requirements and risk management processes. 

Despite these new potentially arduous compliance pressures, trading desks are also likely to benefit from reduced counterparty risk and improved market confidence thanks to the changes. Day-to-day trading activities, liquidity, and risk management on fixed income desks are all things that could be impacted by these new rule changes. As with any regulatory change or evolution, industry participants will need to adapt their strategies and systems to navigate the shifting fixed income landscape.

“As numerous policymakers, academics, and market participants have recognised, greater central clearing of US Treasury transactions would improve the safety, soundness, and efficiency of the US Treasury market, promote competition, enhance transparency, and facilitate all-to-all trading,” notes Laura Klimpel, managing director, head of fixed income and financing solutions at The Depository Trust and Clearing Corporation (DTCC).  

“Increased central clearing can also reduce clearing costs and credit risk by incentivising direct participants to submit more balanced portfolios that have a lower risk profile and thus carry lower clearing fund and liquidity facility requirements.”

In addition, with the introduction of balance sheet netting and favourable regulatory capital treatment, central clearing could result in an increase of dealers’ capacity to transact and potentially improve some market liquidity constraints.

The SEC’s new rule changes are primarily aimed at improving market stability and minimising systemic risks. They aim to strengthen the security of the US Treasury market by requiring central clearing for eligible instruments such as repos, reverse repos, inter-dealer broker transactions, and other cash transactions. The objective of these rules is to reduce counterparty risk, curb contagion, and enhance market transparency.

“The lessons learnt from past financial stress conditions and crises, particularly those involving non-bank market participants, have driven these changes. One counterparty defaulting could pass risk on to another party, this in turn could have a cascading effect on liquidity across the market,” highlights Edoardo Pacenti, head of trading tools for fixed income at ION. 

“In addition, currently, the Fixed Income Clearing Corporation (FICC) is indirectly exposed if one of its members makes a trade with a non-member and subsequently defaults on the transaction. With these changes, there will be a dramatic increase in the amount of daily US Treasury clearing activity processed through the FICC.”

As it currently stands, two compliance dates exist which firms should be most conscious of. If no extensions are actioned, 31 December 2025 marks the beginning of the mandate for cash transactions, while on 30 June 2026 the repo transaction mandate will commence. 

Institutions should also note that the SEC has implemented a regulatory change to redefine the term ‘dealer,’ aimed at increasing oversight of proprietary trading firms (PTFs), which are key liquidity providers in the US Treasury market. 

PTFs, which trade using their own capital rather than on behalf of clients, will now be required to register as dealers with both the SEC and FINRA. Alternatively, if PTFs prefer not to register as dealers, they must set up a sponsored member arrangement.

“While this is a significant change for PTFs, they already have experience delivering similar large-scale projects following the change to the T+1 settlement in May 2024 which can be applied to the upcoming dealer redefinition and central clearing changes,” adds Pacenti. 

Another key consideration for institutions is the increase in clearing volume that will occur as a result of these rule changes. 

“Our understanding is that seven trillion or so is the daily average volume that is traded in these markets. Based on our engagement with market participants, we’re expecting that it’s going to be an increase in demand for capital – maybe a 20-30% increase,” notes Kevin Khokhar, head of investment funding at T. Rowe Price. “Firms will have to look at the infrastructure, systems and processes, to see if they can absorb this large market structure regulatory change.”

Khokhar continues to highlight that margin and portfolio funding impact should be another key focus for institutions as they adapt to these rules. When considering bilateral transactions, which typically occur in the treasury trading space, when shifting into a cleared model, there will be increased rules and regulations around the type of assets you can pose for margining, to optimise and normalise FI trading books.

“Being able to understand the impact of your liquidity profile in your trading portfolios will be one of the key factors, something that the market needs to consider as you get into clearing market structures,” he adds. 

Competition

The new fixed income clearing rules could potentially have a significant impact on competition in the bond markets, particularly for new entrants. By mandating central clearing for a wider range of transactions and increasing oversight on market participants, the new rules could raise the operational and compliance costs for smaller firms and new market entrants. Despite this potentially leading to barriers to entry, it could also enable a more level playing field by reducing counterparty risk and increasing transparency. 

“Transparency is always good for competition, right? It narrows bid ask spreads. It makes things easier to trade and encourages more to be involved because there’s more information,” notes Brian Rubin, head of US fixed income trading at T. Rowe Price. 

“The new rules should make markets more liquid. We’re always looking for greater transparency.”

Established firms, which have more robust infrastructure and regulatory expertise, may find it easier to adapt to these changes, while newer players will need to navigate increased regulatory expectations to compete effectively.

The new rules also have the potential to shift the ways in which transparency exists within the fixed income landscape. Particularly, with a shift from transparency solely being held by broker dealers, to the buy-side. 

“As you move from more of a bilateral transaction-based market to more of a cleared based model, market participants including buy-side participants will potentially see more transparency into what the transactions levels look like, what overall trading volume trends are, and also some of the post-trade aspects that impact FI Treasury and repo markets,” emphasises Khokhar. “That gives market end users more transparency on the buy-side to see what potentially may be happening from the dealer/broker community.”

Impacts on trading

Central clearing is expected to alleviate counterparty credit limits through improved risk management and transparency offered by central counterparties (CCPs) and shift previously uncollateralised bilateral agreements to CCPs. This transition should notably reduce the risks of counterparty defaults and fire sales.

“This could improve market liquidity by removing existing trading restrictions and mitigating counterparty and bilateral trading risk. This will be particularly beneficial in times of stress, as these factors will ensure that dealers don’t withdraw liquidity,” notes Pacenti.

“At the same time, the cost of central clearing and risk management activities will likely increase the overall costs of transactions for participants who don’t currently centrally clear transactions. These costs will be passed on from FICC members to non-FICC members.”

Likewise, highly leveraged or low-margin trading strategies, such as basis and relative value trades, may become less viable due to these proposals. As a result, fewer PTFs may engage in these trades, causing a decline in liquidity for the underlying asset classes, like US Treasury actives. This could offset some of the anticipated benefits of the new rules.

Anticipating the changes 

DTCC’s Klimpel tells The TRADE that as a covered clearing agency, FICC has been taking the necessary steps under the SEC rule requirements to prepare for this significant market structure initiative. 

“FICC offers a variety of both direct and indirect membership models for buy- and sell-side market participants. As we prepare for the upcoming mandate, FICC continues to work with the industry to educate firms, assess offerings, and ensure readiness,” she states.  

“Our guidance to market participants is to begin preparations now by evaluating direct and indirect access models to determine the best approach for their organisations and clients to achieve successful implementation by the SEC compliance dates.”

Another strategy being developed in response to these changes is increased investment in technology, primarily to offset the costs of central clearing. This involves investing in scalable transaction reporting systems, which reduce reliance on manual processes, lower the risk of errors, and decrease the marginal cost of each transaction.

“Overall, investing in technology will make it more economical for firms to comply with the new rule changes,” adds Pacenti. 

With rule changes such as these, the impacts will be felt across institutions, spanning across different areas of their operational structure. Having open and more transparent communication among the different strands of a business will have a positive impact on efforts to make compliance successful.

“We have to understand the impact from a fixed income trading perspective, but also post-trade services and capabilities. We need to assess the impact to operations, risk, and other business units as well as our external providers for sourcing portfolio liquidity,” argues Khokhar. 

“Another aspect is having operational strategies, where market participants should implement a governance structure across all potential impacted business units to fully understand the impact to your front-to-back trading platform.” 

Despite some hopes that the implementation of these fixed income clearing rules will be delayed, institutions should act as though the set dates are expected to go ahead as planned to ensure adequate adjustments are made to ensure successful compliance. Clearing obligations will undoubtedly become more prominent, requiring an increase in viewpoints of margin requirements and risk management processes. As with any key regulatory change, the sooner institutions can prepare, the better the outcome will be for the industry at large. 

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The trade associations – namely, the Association for Financial Markets in Europe (AFME), BVI (German Investment Funds Association), Bundesverband der Wertpapierfirmen (bwf), the European Fund and Asset Management Association (EFAMA) and the International Capital Markets Association (ICMA) – have released a joint statement on behalf of their members active in the EU bond markets, including the sell-side, buy-side, and financial market infrastructures.

The associations noted that distinguishing between investment grade (IG) and high-yield (HY) corporate bonds is a key component to tap into greater transparency in more liquid bonds, while ensuring protection for those bonds.

Particularly, as overly prompt dissemination of trade information could lead to a negative impact on market liquidity.

“Having a distinction between IG/HY corporate bonds allows for more tailored transparency levels for instruments with different price volatility profiles,” the trade associations said in their joint statement.

The associations highlighted sophisticated bond markets outside of the EU for calibrating transparency for corporate bonds according to the credit rating of the issuer, adding that “not adopting a similar methodology would put EU corporate bond markets at a disadvantage globally.”

As a result, policy makers have been urged to ensure that the European Union will maintain its competitiveness in the global fixed income markets, alongside preserving and potentially expanding existing liquidity in EU bond markets, which in turn will continue to ensure issuers have an effective way to finance their investment needs.

“It is clear that there are precedents for using credit ratings, not just across jurisdictions but also under other EU regulations,” added the trade associations.

Credit ratings, which has been a criterion used by TRACE in the US for years, as well as the more recent UK adoption of credit ratings through the FCA, were noted by AFME as an approach that can “provide sufficient reassurance for regulators in the EU as well […] and can help achieve the goal of competitiveness of EU capital markets with other leading global financial centres.”

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As part of the role, Kisacik will focus on finding liquidity in both sovereign and corporate bonds for the firm’s clients, with a primary focus on hard currency bonds.

“Mert’s knowledge and relationships with Turkish and Israeli bond market investors will be a valuable addition to our team,” said Andrea Podesta, managing partner at KNG Securities.

He joins KNG from Morgan Stanley, where he spent the last two years, most recently as part of the bank’s emerging markets cross asset sales team.

His work included FX, rates, credit and commodities, with a focus on sales to Turkish and Israeli clients.

Elsewhere in his career, Kisacik worked at Yapi Kredi, one of Turkey’s first nationwide commercial banks.

While at the firm, his roles included managing the balance sheet of the bank as well as pricing and marketing derivative products to clients.

 “KNG has developed a reputation in the market for being able to find liquidity in even the most challenging conditions. I’m looking forward to joining the team and contributing to the firm’s growth,” sad Kisacik.

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Jim Kwiatkowski, chief executive at LTX

The collaboration will enable dealers to efficiently onboard and connect to LTX, via TransFICC’s One API for eTrading platform.

“Our strategic partnership with TransFICC enables faster time-to-market and simplified access to LTX’s innovative RFQ+ trading protocol, reducing operational burdens,” said Jim Kwiatkowski, chief executive at LTX. 

“Together, we are lowering the cost associated with trading corporate bonds and helping to deliver best execution to clients.”

Read more: Fireside Friday with… Broadridge LTX’s Jim Kwiatkowski

Venue onboarding is often considered to be a complex and time-consuming task, made worse by limited technical resources for the fixed income sector.

TransFICC’s technology aims to address the challenges of fragmentation, complex workflows, data throughput, and regulation associated with fixed income trading.

Corporate bond dealers specialising in US investment grade, high yield, and emerging market credit products can leverage TransFICC’s One API for eTrading solution for direct integration with LTX. This will enable the simplification of workflows, reducing complexities, and enabling faster access to LTX’s AI-powered corporate bond e-trading platform, the firm stated.

By simplifying connectivity and improving integration efficiency, TransFICC’s technology also allows market participants to join LTX’s ecosystem of liquidity providers.

“We’ve seen enthusiasm from clients about speeding up their connectivity to LTX, and we’re excited to integrate to provide mutual clients with simpler connectivity, access to new trading protocols, and enhanced liquidity,” said Steve Toland, co-founder of TransFICC.  

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In the next few weeks, the Financial Conduct Authority (FCA) is expected to begin its tender process and criteria for the UK CTP, while ESMA intends to begin the process for the EU CTP in January next year.

Confirmation and authorisation of the new CTPs is expected to be in Q4 2025, with go live dates expected in 2026.

CTPs are anticipated to deliver improved transparency for all subscribers, with valuable insights provided to fixed income across multiple use cases.

ESMA and the FCA have both emphasised that CTPs should provide a low-cost, resilient and high-quality service, with quick implementation, connecting to all trading venues and APAs across the UK and EU, and distributing data to users.

“TransFICC has been running a CTP pilot for nearly two years and during that time clients have tested it for performance, resilience, and ease of integration,” said Steve Toland, co-founder of TransFICC.

“The buy-side, sell-side, market data firms and venues have successfully tested data contribution and data output, the results of which have given us significant insight into how to develop and support a CTP in production.”

TransFICC offers trading technology for fixed income, seeking to resolve market fragmentation and to deliver workflow efficiencies to banks and asset managers globally.

The firm provides connectivity to multiple trading venues while supporting a range of workflows across asset classes.

“By using key components from our existing technology, we are able to deliver a low-cost tape in terms of initial build and ongoing running costs. In addition, quality and latency will not be compromised, which includes the tape being able to support the real time publication of trades and potentially price streaming and pre-trade market data in the future,” added Toland.

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Laura Misher, Kat Sweeney

As part of the partnership, S&P Global bond reference data will be integrated into MarketAxess’ suite of data products, while MarketAxess CP+ real-time pricing will also be included into S&P Global’s evaluated bond pricing.

MarketAxess CP+ is a real-time bond pricing source for global credit, rates and emerging markets powered by AI and proprietary data. The source is used by clients for price discovery, transaction cost analysis, and automated trading strategies.

The combination of S&P Global’s evaluated bond pricing of over 1.2 million corporate, sovereign and municipal bonds with MarketAxess CP+ is expected to lead to more consistent pricing and greater efficiencies across the trade lifecycle including front-, middle- and back-office functions.

“We are excited about this collaboration as it connects a market-leading institutional trading platform with a leading data provider, bringing transparency and consistency in data used across the different functions of our customers,” said Laura Misher, vice president at SPGMI.

“Additionally, our combined expertise will allow us to develop solutions that will address customer challenges across the trade lifecycle.”

The data integration is expected to start in H1 of 2025, enabling the companies to differentiate their existing product offerings and innovate new solutions.

The development follows Intercontinental Exchange’s ICE Bonds and MarketAxess connecting their respective liquidity networks in a bid to improve efficiency and access to deeper liquidity in fixed income markets, announced in August.

Read more: ICE Bonds and MarketAxess connect liquidity networks to bolster bond market efficiency

“Incorporating CP+ into S&P Global evaluated bond pricing service will enable our firms to close the gaps between best execution, intraday trading decisions and end-of-day valuation,” said Kat Sweeney, global head of data and ETF solutions at MarketAxess.

“We are thrilled to be working with S&P Global Market Intelligence, an innovator across the entire fixed income ecosystem, to further our common goal of bringing more transparency to the fixed income cash and ETF markets.”

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Specifically, the update will allow for clearer definitions of rotation trade equity, credit, and duration in bonds as iFlow will be able to generate on-demand charts for shorts, holdings, and positioning.

“The new indicators are designed to provide transparency into unexpected market moves and show how markets have acted historically, helping to determine the potential vulnerabilities around shock events,” explained BNY. 

iFlow Shorts aggregates short interest metrics that log borrowing and lending behaviour, while iFlow Holdings demonstrates investor exposure to stock and bond markets. This includes a holistic view into how investors have allocated capital across factors such as country, sector, credit rating and maturity. 

iFlow Positioning measures investment preferences – comparing capital deployment across countries and sectors.

Read more: Fireside Friday with… BNY Mellon’s Geoffrey Yu 

Jason Vitale, head of global markets trading at BNY, said: “Finding ways to distil and understand market data continues to be one of the most important priorities for our clients. The challenge of today is no longer about getting access to vast market data sets but finding ways to unpack and generate those insights.

“Given our unique vantage point, touching around one fifth of the world’s investable assets, and through our expanded iFlow capabilities, we’re able to help clients better understand global markets.”

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