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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Bloomberg’s foreign exchange electronic trading platform (FXGO) BMatch solution will provide spot matching functionality to the local interbank community for US dollar against the Nigerian naira.

The solution allows anonymous orders to be placed into a central limit order book, which are displayed and then matched with counterparty orders based on mutual trading limits and other specificities from each bank.

Banks can integrate the offering with their middle- and back-office systems.

Bloomberg added that consolidated trade statistics can also be calculated and made available to the market.

“We are pleased to partner with Bloomberg at this critical phase of the FX market reforms being undertaken by the CBN to enhance the price discovery process with the adoption of the Bloomberg BMatch, a more efficient FX pricing system in the market”, said Omolara Omotunde Duke, director of financial markets at CBN.

“The BMatch will provide a robust oversight function for the central bank’s market surveillance activities and deliver better transparency on the prevailing market determined exchange rate. This will be supported by the adoption of the Nigeria FX code by market participants to promote ethical FX market activities.”

FXGO is Bloomberg’s multi-bank FX trading solution providing access to liquidity through real-time pricing, workflow solutions and analytics for price takers worldwide to negotiate FX transactions with their bank relationships.

FXGO offers streaming or RFQ for spot, outrights, swaps, NDFs, deposits, precious metals and options in any currency pair and tenor, alongside providing access to algorithmic order solutions from over 30 providers.

“We are proud to support CBN with our tailored BMatch solution and deliver with it increased transparency, liquidity and efficiency for the Nigeria FX markets,” said Tod Van Name, global head of FX electronic trading at Bloomberg.

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Thomas Gallagher

The offering is based on Bloomberg Indices’ portfolio of benchmarks and combines MIH’s expertise in operating the relevant exchanges with Bloomberg’s advanced technological capabilities to “bring much-needed competition to the equity index derivatives industry,” said Thomas Gallagher, chair and chief executive of MIH. 

In the first instance, MIH will offer several equity index products to be exclusively listed and traded on MIH’s exchanges, subject to regulatory approval.

Read more: Miami International Holdings completes acquisition of Dorman Trading

“Bloomberg Indices has invested considerable resources in developing a suite of innovative equity benchmarks covering a broad range of geographies, sectors and industries using our rules-based and transparent methodology,” said Dave Gedeon, chief executive of Bloomberg Indices.

“Our collaboration with MIH to offer financial derivative products based on Bloomberg equity indices will provide the global investment community with a new range of innovative tools to help manage its equity risk exposure.” 

Bloomberg’s suite includes a complete set of global equity index families which cover more than 99% of the eligible free float market cap – specifically across 48 developed and emerging markets.

Its equity indices are available in global, regional, country, and sector exposures and across various currencies and returns for clients. 

Gallagher said: “Our collaboration with Bloomberg Indices will provide the financial industry with access to a broad range of futures and options products designed to meet the needs of both retail and institutional equity investors. 

“We are very encouraged with the long-term potential for our collaboration, particularly given the depth and breadth of Bloomberg’s global distribution capabilities and the growing trend of asset managers, funds, and other investors benchmarking to Bloomberg indices.”

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The development will be used to support the commercial bank’s RMB cash bond market-making under Bond Connect and its USD interest rate swap (IRS) market-making in Hong Kong.

Read more: Bloomberg and HKEX enhance Swap Connect solutions to facilitate global investments for IRS market

Bloomberg’s sell-side solutions – which include TOMS and ETOMS – will allow the bank to optimise its trading services for international investors; automate the workflows of bond pricing, sales and trade execution; and electronify USD IRS market-making.

“As China’s financial markets continue to open up, China Minsheng Bank is committed to strengthening ties and communications with foreign investors and enhancing our market-making capabilities,” said Qingyu Wang, head of financial markets department at China Minsheng Bank.

“Our collaboration with Bloomberg provides automated workflows for better operational efficiency, a transparent price display channel to facilitate informed decision-making and a means to reach out to global investors.”

TOMS was previously adopted by China Minsheng Bank to book multiple asset class exposures, enabling real-time profit and loss and risk analysis, as well as integration with back-office settlement systems.

The addition of ETOMS will enable the commercial bank to send customised quotes to clients, provide pre-trade quotes and axes into aggregation tools, and display real-time quotes on a designated page of the bank on the Bloomberg Terminal, bolstering communication and trading efficiency among investors overseas.

“We are pleased to strengthen our partnership with China Minsheng Bank and support its international business development with our industry-leading sell-side solutions,” said Dahai Wang, head of Greater China at Bloomberg.

“Electronic trading and automated workflows are important trends in global finance, enhancing competitiveness through more accurate pricing, smoother trade execution, and efficient risk management.”

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Bloomberg AIM was selected by APS to increase the firm’s operational efficiencies, particularly around its volume of transactions.

The solution and its post-trade straight through processing (STP) package will also provide APS with real-time transparency on trade matching. 

“APS Asset Management has undergone substantial growth over the past few years and was in search of a technology partner to help us uncover operational efficiencies,” said Lu Lan Fang, chief operating officer at APS Asset Management.

“Bloomberg is our partner of choice and their end-to-end trading and automation solutions have allowed us to enhance our investment capabilities in an agile way.”

Separate to providing more focus on exception management, Bloomberg AIM will also help APS manage regulatory updates such as the North American shift to T+1 settlement introduced in May.

Read more: Bloomberg unveils enhancement to FX execution offering in wake of T+1

“Financial markets are constantly evolving and we’ve seen first-hand that buy-side firms which embed the right tools and technology are gaining a competitive edge,” said Manju Sakhrani, APAC head of buy-side product sales at Bloomberg.

“We are proud that our partnership with APS Asset Management will help them scale and automate workflows.”

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The new offering will also be available via Data License for scalable enterprise-wide use.

CSRD increases the scope of firms required to disclose ESG data publicly and widens reporting to more than 1,000 metrics covering both financial and impact materiality criteria.

Once reporting requirements begin in 2025, Bloomberg stated that the new data offering will help to holistically inform the sustainability strategy of financial firms and will help with the sustainability reporting of their financing activities.

“Better data drives better investment decisions, which is why Bloomberg is taking steps to ensure its clients will benefit from the tremendous increase in the quantity, quality and reliability of ESG data reported under CSRD,” said Patricia Torres, global head of sustainable finance solutions at Bloomberg.

“By providing high quality ESG data alongside financial data to our clients, we help them seamlessly understand the sustainability profile of their investments and streamline their reporting.”

The new offering is based on a mapping of the European Sustainability Reporting Standards (ESRS) to existing Bloomberg data fields.

Read more: Bloomberg selected by Banorte to support regulatory compliance for monitoring derivatives hedging

The new offering includes historical data for a subset of fields reported by institutions voluntarily or as part of previous regulatory requirements. Additional fields will be developed, ensuring clients have access to mandatory quantitative disclosures covering both financial and impact materiality.

Companies required to report in 2025 are already included in Bloomberg’s coverage, with plans to extend coverage to include the companies that will start to report in 2026.

“Bloomberg has the scale and experience necessary to deliver the broad range of new ESG disclosures under CSRD to our clients in a timely and efficient way,” added Nadia Humphreys, global head of sustainable finance date solutions at Bloomberg.

“This marks the first milestone of our CSRD solution, which will continue to evolve to capture the depth and breadth of available company-reported data, helping clients to take action and make well-informed decisions.”

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In addition, Banorte uses MARS Front Office and MARS Counterparty Risk solutions, alongside MARS Hedge Accounting, which offer the firm a complete set of risk management capabilities. 

MARS Hedge Accounting’s functionality supports the documentation, evaluation and measurement of the impact of hedges, and is designed to help clients comply with US Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS).

By using MARS Hedge Accounting, Banorte will be able to calculate the effectiveness of its clients’ derivative hedging strategies to mitigate interest rate risk.

“Innovation and adherence to best practices is an essential part of our business in financial risk management,” said Abraham Izquierdo, Banorte’s managing director for risk and trading.

“We are always looking for new ways to deliver value to our clients and the implementation of MARS products provides us with the latest technology for robust processes to underpin and optimise risk management, aligning risk management with the strategic vision of our institution.”

The performance of the recommended hedges can be tested by Banorte by using a retrospective and/or prospective approach, allowing the firm to comply with some of the requirements of the Central Bank’s new derivatives rules.

MARS will also help address increasing requirements for hedge accounting and related financial instrument regulations.

“We are pleased to continue to support Banorte and deliver value through MARS Hedge Accounting to help them realise additional efficiencies in both their workflow and the workflow of their clients,” said Rachid Lassoued, global head of financial engineering and risk at Bloomberg.

“The use of MARS Hedge Accounting will allow for further transparency into their hedge accounting practices and assist their clients to assess their hedging strategies reliably and regularly.”

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The service will allow users to send FX orders into executing counterparts without being present in the time zone in question.

Read more: ‘Time is money and time is risk’ proclaimed Gensler ahead of T+1 implementation, but how is the market feeling as reality hits

Though sell-side banks offer this service via their forwards desk, the BFIX T+1 benchmark allows for a minimised impact on banks’ credit facilities when done at scale, according to Bloomberg.

“While sell-side banks can currently offer this service through forwards desks on a T+1 basis taking opposite risk from the spot desk on a T+2 basis, the forwards desk inherits a tom next FX swap which may ultimately impact banks’ credit facilities when done in sizable volumes,” said Bloomberg. 

The initial launch extends to 20 deliverable currencies globally, including USD, GBP, HKD, EUR, and JPY among others.

Client auto-routing ticketing is set to be facilitated by Bloomberg FXGO and users have been directed to reach out for details on how to route a new BFIX T+1 order.
 
“With extensive use of BFIX in currency derivative products, accurate date alignment and a stable window environment for bank execution, BFIX is now a well-established FX benchmark clients rely on globally and BFIX T+1 is a natural evolution to our offering,” said Colin Gallagher, BFIX benchmark and currency indices product manager at Bloomberg Index Services.

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The watchdog is expected to publish its results in the fourth quarter of this year and the findings will heavily impact who will go on to bid as part of the tender process, which is expected in the second half of 2025. As anyone reading the consultation can see, there is still a plethora of creases that need to be ironed out across latency, the commercial model, and many of the technical standards.

Currently the market has one bidder to provide the consolidated tape: EuroCTP, the exchange-backed initiative. However, with a piece of financial infrastructure as essential as this coming to Europe for the first time, one would hope there would be an element of competition in the tender process. It’s hard to classify someone best in class when the class consists of one. As things currently stand, ESMA is going to have an awfully easy job on its hands selecting its champion.

With the consultation now open, perhaps its results will generate some welcome competition for EuroCTP.

One bidder to rule them all

Backed by 14 exchanges as its shareholders, EuroCTP was first announced in the third quarter of 2023. The start-up is now in the process of firming up its plans to make its official bid in 2025.

As a start-up, the firm will not use in-house technology. Chief executive of EuroCTP Eglantine Desautel tells The TRADE that EuroCTP has finalised the shortlisting process for its prospective technology partners and is working towards a final selection for August or September.

With the ESMA consultation results due in December, Desautel explains that the joint venture intends to take some bets ahead the results in order to give itself enough lead time to develop its bid: “We cannot afford to wait for everything to be set to start our delivery work.”

EuroCTP’s backing by European exchanges has been dubbed as both a strength and a potential weakness, however, further fanning calls for a competing bid to come to market. As the core venues for Europe and hosts to the reference price-generating lit continuous markets, it makes sense for exchanges to be heavily involved in the implementation of Europe’s first consolidated data source.

However, looking at the rhetoric around the consolidated tape debate that has plagued the Mifid II Review for the last few years, one can’t help but notice that it is those that were least in favour of a consolidated tape, in particular the much sought after inclusion of pre-trade data, that now make up the shareholders board of the most advanced bidder.

On the other hand, their role in EuroCTP could offer a welcome solution to said problem. Exchanges were concerned over the damaging impact a tape could have on revenues they make from data products. As shareholders of the tape provider, those concerns could be alleviated.

“EuroCTP is a standalone company,” Desautel confirms. “Like any company we have shareholders and shareholders are not involved in the day-to-day activities. The company was created by putting serious money into it to make it work so it’s definitely not a plan just to derail the CTP agenda.”

Contenders

Among those exploring a contending bid for the CTP is French consulting firm, Adamantia Group. Engaged by the buy- and sell-side in 2022 to explore the functional use cases of a consolidated tape, the firm is now exploring becoming an industry led candidate to rival EuroCTP.

“We have reached a new phase in the initiative to assess whether this group or an extended group of firms could possibly apply as a candidate to propose a real alternative to the only official bidder,” Antoine Pertriaux, strategy consulting and research in the financial industry at Adamantia Group tells The TRADE.

“How do you proceed with the selection process when you have only one candidate? We think it will be valuable for the industry to have multiple options in order to challenge each individual proposal and give a better possibility to select the best one.”

Adamantia Group is now assessing its potential to become a candidate and exploring potential technology providers that it could partner with in order to achieve this goal. Backed by over 10 buy- and sell-side institutions, Adamantia has been vocal in its desire for greater pre-trade data included in the tape.

“The idea is to keep it [our initiative] open to any firm who shares the same views and objectives for the CP. In terms of progress, we have added additional firms and there are many more who are also interested in participating,” says Pertriaux.

Natan Tiefenbrun

“All are providing direct support to our initiative. In terms of our current progress, we are finalising the more operational and technological aspects. We need to find the right partner to develop the infrastructure. We’ve had very good discussions which gives us confidence that we can put something together.”

However, their future bid is still unconfirmed.

Also exploring the potential for a joint venture bid is Cboe Europe. Cboe has been transparent with its stance over the last few months that it would consider placing a bid as part of a consortium. However, when asked when, with who, or what that might look like, president of North American and European equities, Natan Tiefenbrun, is holding his cards close to his chest.

“If we were to bid, we would probably have a preference to bid in partnership with others rather than alone – given the financial commitment and risks involved, and the potential benefits of having more expertise available,” he tells The TRADE.

Aquis and the London Stock Exchange Group (LSEG) declined to comment on their potential involvement in the CTP when contacted by The TRADE.

Still an awful long way to go

With ESMA’s consultation in mind, there is still an awful that must be clarified ahead of the tender process next year that will ultimately discourage or encourage further competing bids from across the industry.

Interestingly, among the topics put up for debate in last week’s consultation is ESMA’s proposed model on consortiums. The consultation questions whether or not competition is damaged if a firm that is able to provide the tape on its own is allowed to take part in a consortium.

EuroCTP’s model is a consortium model and should it come to fruition, Adamantia’s model would be similar. Cboe has also made it clear it wouldn’t come to the table outside of a joint venture. These rules and the outcome of the consultation will therefore be closely monitored.

“There is established EU guidance on bidding consortia and that is something we’d have to take into account,” adds Tiefenbrun.

So far legislation around the tape has been somewhat vague. The industry will have a single consolidated tape provider per asset class. It’ll include post-trade data and pre-trade to the extent of level one top of book unattributed data. There will be no mandatory consumption but there will be mandatory contributions, with an opt out scheme for smaller venues.

The revenue model has more structure than before but still needs fleshing out and this is still open to change following the consultation. For example, smaller venues under a certain level will get a six times multiplier on their traded value relative to the value of the consolidated tape. An additional three times multiplier is also added if the venue has had an IPO in the last three years in a bid to encourage more listings. Extra credit is also awarded to bigger venues for any recent IPOs.

However, outside of this, aspects around the tape’s latency, its commercial prospect and costs, its governance structure, its licensing model and its data provision model all need to be finalised in ESMA’s consultation. And, once finalised, these details will ultimately shape the list of contenders who intend to compete to provide it.

Eglantine Desautel

“Our understanding is that connectivity cost between the data contributors and the tape will be the responsibility of the data contributors,” explains Eglantine. “One question we would like to emphasise is what are the communication protocols or the qualitative elements of this communication to make sure that we get the data as fast as possible and in the proper format? “If this kind of thing is pushed into technical standards then it will avoid never-ending discussions.”

Latency will be a huge contributor to the cost of running a tape. Implementing a microsecond latency tape like in the US will be much more expensive than a cheaper tape using milliseconds. US exchanges are geographically not as far apart as some exchanges in Europe and the UK for example this is something that must be considered when designing a tape.

In Europe, the tape isn’t going to be baked into best execution in the same way that is in the US. Pair this with no mandatory consumption in Europe and it means that ultimately users will only buy the data if its attractively priced and deemed useful enough.

“For EuroCTP there is a clear understanding that the tape is not meant to be a high margin activity and it will be strictly organised around the reasonable commercial basis provisions,” explains Desautel. “It’s really important not to overshoot in terms of technology. We can do microseconds if this is what the community needs but there is no need to create an expensive infrastructure that nobody will need.”

The tape provider is also currently set to change every five years. This in itself is something to be considered for those that might look to throw their hat into the ring to host it. Providers must assess how commercially viable hosting the tape could be, weighing up the setup costs, the time to profit and running costs against potential revenues that could be made.

“A change of provider at the five-year mark seems somewhat unlikely but not impossible,” says Tiefenbrun. “You have to make a decision about generating a return in the first five years or having a longer-term horizon for making back your investment. There’s definitely a question that raises around the risk profile of operating the tape. Ultimately it comes down to how the service is priced and how many users there are for those services.”

Data vendors and the golden source

An element that will be interesting to watch play out once the consolidated tape is – finally – established, will be the role of data vendors. While they may not make bids to host the tape themselves, the role they play in supporting a tape will be central to its success.

Many participants have begun to ask questions around how symbols might change on terminals for example or how historical data for a certain instrument will be shown. Will the European consolidated tape price of an instrument be the default one that is shown for example? All of these details will hugely impact how widely adopted a consolidated data source is.

Antoine Pertriaux

“The data service providers will play a critical role for the success of the tape because consolidating the data into the CTP is one thing but the key question is how the users are going to consume the data,” added Pertriaux.

“Clearly the expectation from the user is that those players will be able to intermediate the CTP data and make it available through the existing channels. This means no specific investment or adaptation of systems on a user side. Just click on the new product through the terminal and have access to the EBBO or to the tape data. It will be crucial that the CTP make sure that those players are ready from the start to display the data.”

Bloomberg and FactSet declined to comment when approached by The TRADE.

There’s still much that needs to be clarified before a meaningful competitor to EuroCTP can emerge, but it’s all still to play for. There’s a handful of potential contenders but as it stands, we could have a winner by default. Stay tuned with The TRADE for more updates.

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The move will allow data professionals and quantitative researchers to connect this alternative dataset with Bloomberg’s Data License content, allowing for early insight improved depth of analysis into the performance of consumer companies.

The BSM data analytics feeds are powered by billions of US consumer credit card and debit card transactions, delivering insights into company performance and consumer trends.

“By continuing to build out our interconnected suite of company research products, Bloomberg is a catalyst for change to the typically complex quant workflow that requires sourcing and organising datasets from multiple providers,” said Tony McManus, global head of enterprise data at Bloomberg.

“Delivering our proprietary alternative data directly alongside our traditional financial data through Data License allows quants and research analysts to make efficient, better-informed market projections with unique insights.”

The BSM transaction data analytics feeds are also the flagship data source for the ALTD <GO> function on the Bloomberg Terminal.

Launched in September last year, the function serves as a means to democratise access to alternative data by integrating it alongside traditional market data, broker research, estimates and news on the desktop.

“Making our Bloomberg Second Measure transaction data analytics feeds available for use across the enterprise with Data License is the next step in our effort to lower the barrier to entry for investment analysts to use alternative data for generating differentiated insights,” said Richard Lai, global head of alternative data in Bloomberg’s CTO segment.

“We’re excited to continue building on this momentum to support additional research workflows and create new use cases for Bloomberg’s alternative data solutions.”

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