The first wave of gen-AI use cases across capital markets technology has sparked widespread energy and excitement about its future potential. At the same time, it has triggered a sense of urgency across infrastructure providers globally that they must act now to avoid being left behind.

Market operators face two critical questions today. Firstly, what is the right operating model and the critical capabilities they want to develop and maintain in-house or source from external providers? And secondly, how do they ensure that they will have access to these advanced capabilities, given the extraordinary level of energy and compute capacity that will be required to power their markets in the future?

If we look ahead to capital markets over the next two decades, the future of trading infrastructure will be built on a fabric of interconnected markets with a common data architecture, seamless connectivity throughout the ecosystem of exchanges and participants, minimal latency, and advanced AI-powered tooling.

Operators don’t have long to embark on their data and tech modernisation journey to get there, and we’re proud to be supporting so many of our infrastructure clients on this path. 

Gideon Mann, global head of AI technology, Millennium 

What was cutting-edge generative AI (GenAI) in early 2024 will look outdated over the next twelve months. Successful organisations will adopt a long-term GenAI strategy, balancing immediate applications with the flexibility to adapt to future innovations in this space.  

In the investment management sector, the diversity of challenges allows us to identify some of the most promising applications of GenAI. These are likely to result from a collaborative approach between technologists and their end users including investment professionals, legal, compliance and finance teams, among others. We have seen early applications of GenAI in the areas of market observability, risk assessment and operational efficiency. In 2025, organisations will be looking to scale the use cases that have shown the greatest potential. 

Jamil Jiva, global head of asset management, Linedata 

As we leave 2024 behind, artificial intelligence is set to transform industry practices. From risk management and regulatory compliance to predictive analytics and cybersecurity, AI promises to bring a new era of transparency, efficiency and innovation to the finance ecosystem. 

The widespread adoption of Explainable Artificial Intelligence (XAI) in risk assessment and management systems marks a decisive turning point. This technology is finally lifting the veil on the ‘black box’ of algorithms behind AI inference systems, offering a clear understanding of AI decision-making processes. This creates an opportunity for financial institutions to renew and reinforce the confidence of customers and regulators while improving the accuracy of their risk models. 

Nick Wood, AI product manager, FINBOURNE  

While AI clearly has the potential to enhance operating margins and reshape the asset management industry, serious adoption remains slow. This hold up is largely due to a lack of confidence in the incumbent data management processes, which need to be designed to support AI technologies.

While AI can certainly act as a feature and capability in an overall workflow, firms must be able to explain the models and trust the quality of the underlying data to get there. With AI showing so much promise, prioritising modern data infrastructures to address data quality concerns will be a priority for many asset managers next year. 

Jim Kwiatkowski, chief executive, LTX (a Broadridge company) 

This year, the fixed-income market experienced notable advancements, with credit market volumes reaching an average daily volume of $49.8 billion, reflecting a 23% year-over-year increase. This growth is projected to continue into 2025, fuelled by a steady increase of credit e-trading. 

Looking ahead, AI is poised to play a pivotal role in bond trading, transforming how fixed-income traders, analysts and portfolio managers process and leverage the growing volume of data from electronic trading. By enabling streamlined access to vast, disparate datasets, AI enhances decision-making in areas like bond selection, trade list construction and protocol optimisation. As AI adoption scales, the market can expect a more vibrant secondary trading environment characterised by improved pricing, enhanced liquidity, and stronger overall performance. 

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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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The new functionality will enable users of GPT technology to generate and execute multi-asset class, multi-directional trade lists via RFQ+.

According to the firm, this new capability addresses the ongoing need to streamline workflows, as clients seek to integrate GenAI into their pre-trade and trade execution processes.

“In response to clients’ positive engagement with our GenAI-powered app BondGPT and their request for similarly innovative trading capabilities, we developed GenAI-powered List Trading,” said Jim Kwiatkowski, chief executive of LTX.

“This new functionality builds on LTX’s foundation leveraging powerful AI and advanced trading protocols like RFQ+ and RFX to improve efficiency, increase time savings and offer greater flexibility in trading strategies.” 

LTX’s GenAI application BondGPT allows traders to generate lists of bonds based on their specific criteria speedily, which can help construct and execute their list of trades.

Traders can also define rules for auto-execution, allowing for greater workflow efficiency.

Over the past year, LTX has integrated with various firms to enhance its platform. Most recently, LTX integrated with electronic fixed income trading connectivity and integration provider, Multilynq, to accelerate trading connectivity to its platform; and integrated with TS Imagine to bolster mutual buy-side clients’ fixed income liquidity access.

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Jim Kwiatkowski

Jim Kwiatkowski, chief executive of LTX, explained: “Most dealers and asset managers are challenged prioritising their scarce technical resources to complete multiple critical technical projects.

“Our partnership with MultiLynq will assist many clients in reducing time to market and quickening access to LTX’s AI-powered pre-trade tools including BondGPT as well as our innovative RFQ+ and RFX trading protocols.”

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

Currently, more than 35 dealers and 90 asset managers operate on Multilynq’s AI-powered corporate bond trading platform.

Specifically, MultiLynq will allow dealers to more easily integrate LTX into their existing infrastructure, thanks to eradicating the need to deploy their own resources. Users will be able to retain their preferred front-end interfaces.

It is an alternative to direct connection, with the key benefits being swift and flexible implementation which saves both time and cost. 

Patrick Scheideler, co-founder of MultiLynq, said: “This collaboration reinforces our continued commitment to offering fixed income market participants a seamless and cost-effective solution for accessing world-class trading venues like LTX.

“By enhancing connectivity and speeding up access to LTX, we are breaking down technology barriers and creating greater efficiency for fixed income market participants.”

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AJ Cass

The integration will provide buy-side clients with improved pre-trade transparency, price discovery and better access to aggregated liquidity within existing workflows.

“Workflow integration has always been a key element to the LTX strategy as part of our mission to simplify and optimise, embedding new, innovative capabilities within the screens that our clients are familiar with,” said AJ Cass, head of market structure and liquidity at LTX.

“We’re pleased to integrate with TS Imagine, bringing pre-trade transparency and trading efficiencies to our mutual clients’ workflows.”

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

Following the move, LTX’s corporate bond trading capabilities will be directly accessible with TradeSmart Fixed Income.

The integration will also provide LTX order staging for TradeSmart Fixed Income users as well as the ability to submit indications of interest (IOIs) into the LTX Liquidity Cloud – LTX’s network of sell-side axes and anonymous buy-side IOIs.

Liquidity Cloud’s proprietary analysis identifies cloud matches, which are real-time indications of natural contra interest in the Liquidity Cloud, measured by cloud match scores.

The integration will see cloud match scores update dynamically on TradeSmart screens to reflect real-time available natural liquidity.

“Integrating with LTX further enhances the price discovery capabilities available to our clients by offering differentiated liquidity and the ability to manage the entire lifecycle of a trade on a single platform,” said Spencer Lee, chief markets officer at TS Imagine.

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Fragmented liquidity, reduced balance sheet on the sell-side, and increased regulatory burdens have continued to drive change in the market. The fixed income community has had to innovate to remain competitive in an increasingly evolving space. 

Among the key players in this competitive landscape, The TRADE has selected Broadridge’s LTX, FlexTrade Systems, Liquidnet, and Wavelabs.

Broadridge, LTX

Broadridge Financial Solutions subsidiary LTX has made strides over the last 12 months in its mission is to further electronify the corporate bond market. The electronic trading platform enables participants to address challenges associated with accessing liquidity and executing efficiently.

In March, LTX successfully completed the migration of its corporate bond e-trading platform to Amazon Web Services (AWS), allowing LTX to leverage the security and scale of AWS cloud services alongside allowing the firm to better optimise its data science processes. Following this, in June, the business launched BondGPT, an application powered by OpenAI GPT-4 which answers bond-related questions and helps users identify corporate bonds on the LTX platform. Most recently, the business launched an enterprise version of its BondGPT application, named BondGPT+, offering new capabilities focused on the needs of its enterprise client base. The new offering, unveiled earlier this month, incorporating Broadridge technology and OpenAI GPT-4 to answer complex bond-related questions.

In the last year, the data-driven e-platform also launched RFQ+, an enhanced RFQ protocol which combines pre-trade dealer selection analytics with liquidity aggregation capabilities. In July, LTX integrated with BlackRock’s end-to-end investment management and operations platform Aladdin as part of the next phase of the pair’s multi-year partnership.

FlexTrade Systems

Over the past 12 months, multi-asset execution and order management systems provider, FlexTrade has made gone from strength to strength in this space, continually developing its offering to better meet the needs of the market. The business has continued to build out its fixed income execution management system capabilities for its FlexFI solution which can be deployed either standalone or within its integrated multi-asset solution, FlexTRADER EMS.

In December, UBS AM and JP Morgan executed the first EU bilateral trade on FlexFI, made possible through JP Morgan’s ability to provide its electronic liquidity directly into UBS AM’s FlexFi solution. The businesses are working together to provide a transparent way of streamlining workflows and simplifying interactions between the buy- and sell-side in fixed income trading.

In July, FlexTRADER was onboarded by Amundi Asset Management’s execution subsidiary, Amundi Intermédiation to consolidate its trading across asset classes, including fixed income, derivatives and equities.

Liquidnet

Liquidnet has developed its notable work in this space, continuing on with its focused work for the global buy-side community. Last November, Liquidnet expanded its primary markets offering with the addition of live market deals from buy-side order and execution management systems (OEMS) to participating syndicate banks.

Since the initial launch, participant syndicate banks have more than doubled to over 30 who are now sending EMEA deal announcements to Liquidnet. The business has also captured over 1660 new bond deals to trade, with more than 300 traders engaged with the order book, and received $22 billion in order. Invesco Asset Management and Charles River Development (CRD) were the first to facilitate the new functionality following an initial testing period. In January this year, Liquidnet and BondAuction announced their intention to partner to provide their mutual clients access to BondAuction’s offering from their Order Management System. 

Wavelabs 

Fixed income trading technology specialist Wavelabs has been highly active in the market over the last 12 months, working to improve the industry ecosystem, empowering specialists through technological innovation. The business is focused on buy-side fixed income trading and works to facilitate a liquidity-driven marketplace.

Wavelabs’ flagship offering is eLiSa, the execution management system (EMS) is centred around artificial intelligence-based predicative analytics aimed at automating the liquidity seeking process. This June, Wavelabs announced it was set to offer modular version of eLiSA EMS AI-based analytics tools to traders, providing access to eLiSA’s analytics in modular format including its artificial intelligence-based fair value calculator for bonds. Among the key products to now be available in a modular format is the EMS’ predictive fair value (FV) model. ELiSA has seen increasing interest from the buy-side in recent months, onboarding its first hedge fund client the same month.

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The new offering incorporates Broadridge technology and OpenAI GPT-4 to answer complex bond-related questions alongside helping users identify corporate bonds on the LTX platform rapidly.

“Since the successful launch of BondGPT in June 2023, we have received overwhelmingly positive feedback and thoughtful suggestions from our clients,” said Jim Kwiatkowski, chief executive of LTX.

“Based on that feedback, we have moved quickly to incorporate clients’ own data as well as a range of new features in the second generation of BondGPT. The result is that BondGPT+ not only meets our clients’ enterprise requirements, but also sets a new standard for generative AI solutions in the financial industry by providing a single natural language interface for seamless access to much of the data used by busy fixed income professionals.”

The enhanced offering allows clients to securely integrate third-party datasets alongside their own data for easier access to critical information. LTX also stated that BondGPT+ is able to integrate into clients’ enterprise applications, including trading workflows.

BondGPT+ also provides more customisation to clients, allowing users to tailor the platform to their requirements by adding preferences to be considered when generating responses.

The new offering also has a focus on enterprise control and governance, with system administrators having the ability to configure levels of data access through user and firm level entitlements via its admin centre.

“Generative AI has the potential to transform the financial services industry by bringing unparalleled efficiencies to core operations,” said Jean Sullivan, head of wealth management at Celent.

“By integrating BondGPT+’s natural language capabilities and curated data sources with clients’ own data in their own systems, LTX is helping market participants make smarter, more streamlined decisions through easier access to the mountains of disparate data they deal with every day.”

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The integration incorporates LTX’s Liquidity Cloud and actionable pre-trade cloud match scores directly in the Aladdin platform, allowing users of Aladdin technology to leverage data-driven capabilities to improve liquidity discovery and trading efficiency.

LTX’s Liquidity Cloud provides a network of anonymous real-time buy- and sell-side indications of interest. Proprietary analysis within the network identifies cloud matches – real-time indications of natural contra interest in the Liquidity Cloud – which are then measured by cloud match scores. These scores are updated dynamically to reflect real-time available natural liquidity. 

“Some of the world’s largest institutional investors use Aladdin for their end-to-end trading workflows, and we are pleased that this integration enables common clients of LTX and Aladdin to seamlessly access trading functionalities of both platforms,” said Jim Kwiatkowski, chief executive of LTX.

“We are committed to facilitating positive transformation in the corporate bond market with data-driven pre-trade intelligence and liquidity aggregation; this integration offers these advancements within existing buy-side workflows.”

This latest phase of the integration will allow mutual clients to view cloud match scores directly within the Aladdin application OEMS, alongside the ability to directly interact with trading opportunities in the Liquidity Cloud without a staging area.

Users of Aladdin can now contribute their anonymous interests to the Liquidity Cloud and as a result, identify natural contra liquidity.

“We look forward to empowering our users with innovative pre-trade liquidity discovery capabilities and trading solutions like LTX for more seamless and efficient corporate bond trading workflows,” said Kamya Somasundaram, managing director, and a general manager within Aladdin at BlackRock.

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The new protocol, which was developed to reduce information leakage, builds on existing RFQ workflows and facilitates larger trades through the aggregation of multiple dealer responses for their desired amounts.

The move follows the recent launch of BondGPT, powered by OpenAI GPT-4, developed to help simplify workflows and increase efficiency for users’ bond selection and portfolio construction processes – which sees LTX build towards the next generation of AI-enabled workflows.

 “RFQ+ combines AI-powered pre-trade Dealer Selection Scores with novel liquidity aggregation functionality to solve genuine client pain points and further electronify the segment of the market that is still being traded bilaterally,” said Jim Kwiatkowski, chief executive of LTX.

“This is the most recent example of LTX using emerging technologies to drive efficiency in the corporate bond market to the benefit of dealers and the buy-side.”

Dealer Selection Scores gives buy-side clients the ability to optimise the number of dealers that a client sends each RFQ, based on dealers’ real-time and historical LTX Liquidity Cloud input as well as pricing and platform behaviour. Dealers also benefit from Dealer Selection Scores, as it allows them to enhance direct networking to clients.

Once an RFQ+ is sent to an optimal group of dealers, various dealer responders are able to bid or offer for the size they each want. Technology then aggregates the bids/offers, giving buy-side clients the ability to fulfil the block in one session with multiple dealers.

“Executing size in today’s credit markets is often challenging,” said Steve Chylinski, head of FI trading at Eagle Asset Management.

“The approach that LTX is taking to build on the familiar RFQ protocol with RFQ+, the innovative aggregation capabilities and AI powered Dealer Selection Scores can potentially be a game changer for the buy-side and dealers to execute larger trades electronically.”

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The application incorporates real-time liquidity information from LTX Liquidity Cloud to simplify workflows and increase efficiency for users’ bond selection and portfolio construction processes, which LTX stated will benefit asset managers hedge funds and dealers.

According to the firm, BondGPT combines GPT-4 with LTX’s analytics and underlying dataset for data timeliness, accuracy and compliance in the highly regulated financial services sector, avoiding hallucination issues common in other implementations.

“Emerging technologies such as generative AI hold immense potential to drive electronification and transparency in the corporate bond market,” said Jim Kwiatkowski, CEO of LTX.

“By increasing the use of data and applications like BondGPT, market participants can inform and expedite vital pricing decisions, facilitate counterparty selection, and broaden liquidity access. We are proud to accelerate the use of these innovations as we work towards smarter and more efficient trading processes for the industry.”

Earlier this year, LTX successfully completed the migration of its corporate bond e-trading platform to Amazon Web Services (AWS).

The completed migration allows LTX to leverage the security and scale of AWS cloud services alongside allowing the firm to better optimise its data science processes. The move also enables clients to make better informed corporate bond trading decisions based on transparency and real-time insights.

“BondGPT powered by OpenAI GPT-4 is available to all Broadridge LTX clients today,” said Martin Koopman, chief product officer and co-head of AI at Broadridge.

“It adds generative AI to build on the AI neural network that LTX has used since launch. BondGPT is the first of many products and services Broadridge will release to our clients using this powerful technology in a safe manner, leveraging our deep regulatory knowledge and data privacy standards.”

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