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.  

The post Broadridge’s LTX and TransFICC enter strategic partnership appeared first on The TRADE.

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.

The post TransFICC to bid for fixed income consolidated tapes appeared first on The TRADE.

Named TransACT (Automated Customer Trading), the service aims to combat difficulties associated with banks building automated negotiation systems to respond to customer RFQs, based on multiple RFQ negotiation workflows supported by D2C trading venues. 

This process of automating these workflows is currently complex and time-consuming, as all state transactions need to be mapped, codified, tested and maintained.

TransACT claims to simplify the process and time to market for a bank to develop automated trading solutions for customers. The bank provides the customer price and TransACT is able to manage all other aspects of the RFQ negotiation.

The new service is available for use on MarketAxess, Tradeweb, Bloomberg and Trumid for US credit, with the service set to expand to other RFQ assets later this year.

Read more: TransFICC to launch eTrading service for interest rate swaps 

TransACT automatically negotiates RFQs on dealer instruction and is provided as a hosted service where venue connectivity and all negotiation workflows are automated.

The offering enables dealers to fully automate significant parts of their credit trading, alongside allowing trading desks to focus on larger tickets and risk management strategies, while automated RFQ negotiation provides clients with an improved service.

“Our auto-negotiation service provides the code, support, and security out of the box,” said Judd Gaddie, co-founder of TransFICC.

“The only bank requirement is to have a Pricer, meaning the service can quickly go live. What used to take months or years for a bank to deploy has been reduced to a few weeks.”

The post TransFICC launches new automated RFQ service for US credit appeared first on The TRADE.

Fixed income ETFs have continued to prove their worth as an extremely flexible product for investors. They’ve enabled market participants to transfer risk quickly, even when the underlying bond market is restrained. ETFs have several different use cases for investors, including but not limited to cash equitisation and tax management, hedging vehicles and lower impact ways to express short-term tactical views on the market. All of these use cases should continue to proliferate next year, especially as we see the industry trend towards a heightened focus on trading costs, the rise of multi-asset trading and the continued liquidity demands.

Steve Toland, co-founder, TransFICC 

Over the past few years automated trading has grown slowly in fixed income, but we expect 2024 to be the year when this really accelerates. All trading firms are looking for increased efficiencies, but many workflows have been seen as too complex to automate, meaning that manual trading persists in many parts of fixed income. This is no longer the case, as technology is flexible enough to follow any workflow currently performed by a person. Credit trading provides a good example of the benefits, where RFQ negotiation and trading can all be automated. Moving smaller trades to an automated process will improve response times, increase the number of trades dealt, and allow traders to focus on larger more profitable deals.

Legislation will also feature highly as firms prepare for DORA (Digital Operational Resilience Act), where compliance is expected by early 2025. DORA applies to more than 22,000 financial entities in the EU. Importantly, it also applies to technology providers in the EU, as well as those supporting EU entities from elsewhere. The aim is to strengthen the financial sector’s resilience to technology-related incidents and introduces very specific and prescriptive requirements, like having robust measures and controls on systems, tools and third parties, and having the right operational continuity plans, while continuously testing their effectiveness.   

Vincent Grandjean, co-founder and chief executive officer, Propellant 

As 2024 unfolds, the fixed income market landscape is experiencing a rapid transformation, driven by both technological advancements and regulatory changes. A key focus in this evolving arena is the enhancement of transparency and the efficient utilisation of data. A significant development is the integration of unique product identifiers, marking a stride towards standardisation in market transparency. Yet, this contrasts with regional divergences, especially in the UK and Europe, where transparency thresholds and reporting requirements vary. Navigating these diverse regulations requires a meticulous approach.

The transformative power of big data is also coming to the fore. With an abundance of data now available, there’s a shift towards using these vast datasets to inform pre-trade decision-making, thereby enhancing market strategies and risk assessment. Moreover, as technology increasingly becomes central to data processing, the industry faces rising costs and complexities in maintaining such infrastructures. This has led to a trend towards outsourcing to balance efficiency and cost-effectiveness. Additionally, the application of AI in extracting actionable insights from complex datasets is gaining momentum. This trend is expected to provide a competitive edge in the market. Overall, the fixed income markets are set to become more informed, efficient, and dynamic, navigating this evolving landscape with a renewed focus on clarity and strategic foresight.

Venky Vemparala, global fixed income product manager, FlexTrade Systems

This year saw a rapidly evolving fixed income EMS space, and in 2024, we expect innovation to continue at a lightning pace. Over the next year, I envision automation as a central theme, with data and analytics being adjacent solid themes. The buy-side will continue to push for efficiency in managing their trading blotters. In turn, venues and platforms will respond with increasingly rich automation functionalities, each with a distinct set of workflows, which is where an EMS is now becoming a crucial tool on bond trading desks to aggregate. 

The buy-side will see additional value and optimise their overall trading workflows by opening the lifecycle of the venue’s automation via API and touchpoints to achieve more granular access and overall control of the automation functionality. In turn, venue and platform automation solutions will become more “algo” like with templated parameters, with the potential for common slippage and performance benchmarks defined and standardised in 2024. Alongside automation, the drive for sophisticated, actionable data will also be at the forefront of innovation, with deeply integrated analytics being crucial to assist with automation decisions and portfolio trading list iterations. It will be fascinating to see the innovation 2024 brings.

Mike Sobel, co-CEO and president, Trumid

US bonds recorded their best month in nearly 40 years in November. With attractive yields and increasing accessibility of the asset class, fixed income is drawing in a more diverse set of market participants. New interest players, such as systematic quants and retail investors, along with more traditional buy- and sell-side institutions are focused on the credit market. 

With alternative participants entering the credit space, technological advances, and the proliferation of market data, the tailwinds for the adoption of more advanced electronic workflows are giving rise to a new era of tech-enabled credit trading. Client interest in intelligence and automation is accelerating as tech-savvy and data rich users seek agile platforms that can rapidly innovate alongside them and provide the aggregated and customised insights that they need.

The credit electronification story is far from over. Greater adoption is creating a network effect – driving liquidity and the velocity of the asset class. Over the next 12 months, we therefore expect technology to play a greater role with intuitive workflows, protocol flexibility, and data-driven decision-making tools adding the greatest value to traders and investors.

The post The TRADE predictions series 2024: Fixed income, innovation and electronification appeared first on The TRADE.

The eTrading service responds to demands from banks seeking increased efficiency when responding to request for quotes (RFQs) by providing traders with pop-up tickets to support outright, curve and compression trades, with pricing fields automatically populated by internal pricing engines.

All IRS workflows will be supported by this service, alongside providing full security and disaster recovery, speedy deployment and the ability to install a new bank client with dedicated hosting in less than two weeks.

“We have built a service that is easy for banks to deploy. Private circuits and dedicated hardware meet the security and compliance needs of banks, and the GUI is lightweight, performant, and simple to integrate with internal bank applications,” said Judd Gaddie, co-founder of TransFICC.

“We have also developed a simulator for incoming RFQs to help banks test their pricing applications.”

The eTrading service is live with IRS. US credit trading is expected to be added this summer.

“Adding eTrading is a natural extension to our existing service and uses the same ‘One API’ product,” said Steve Toland, co-founder of TransFICC.

“Banks trading in fixed income markets need technology which supports new venues and workflows and enables them to reduce legacy system costs. Our eTrading service does exactly that.”

The post TransFICC to launch eTrading service for interest rate swaps appeared first on The TRADE.

Vuk Magdelinic, chief executive officer, Overbond:

Steve Toland, co-founder, TransFICC: Over the past few years many people have predicted that the fixed income market would consolidate. In fact, the opposite is true, with more than 170 fixed income electronic trading venues currently live (an increase of approximately 20 in the past year). In 2023 we predict that market fragmentation will increase, with the launch of more e-trading venues. Also, as dealers seek to manage trading costs, direct connectivity will increase, where dealers provide direct streamed prices as an alternative source of data and direct trading. Modular technology will drive the market forward, and we expect to see opensource technologies become used more widely in fixed income, as firms accept they do not need to build all the applications in their technology stack. Cloud adoption is another key trend. In the past two years there has been more acceptance that the Cloud offers the benefits of scalability, efficiency, and reduced costs, and that it can be used for trading asset classes that are less sensitive to latency. With increased efficiency a key requirement for all trading firms, modular technology solutions, built in the Cloud for maximum scalability to meet evolving functionality, will be essential to the evolution of the Fixed Income market during 2023.

Raj Paranandi, chief operating officer, MarketAxess EMEA and APAC: The last 12 months have resulted in some of the most volatile and challenging liquidity conditions the bond market has faced in recent memory. Recent periods of volatility have created a greater desire from market participants to innovate and adapt to new approaches in the market. In fixed income this has continued to drive electronification and the use of data to enable transparency in decision making. We continue to believe that all-to-all trading is an essential mechanism to allow investors to navigate stressed market conditions, where there may otherwise be liquidity shortages.

Stefano Dallavalle, fixed income product manager, EMEA, FlexTrade Systems: The adoption of EMS technology will continue to grow into 2023, with the streamlining of execution workflow driving efficiency in fixed income emerging as key drivers for the buy-side. The next 12 months will build upon existing automation to see additional protocols and destinations made available to smart order router (SOR) strategies to deliver improved choice and flexibility of execution to the buy-side. Additionally, bilateral dealer connectivity via EMSs will offer a disruptive alternative to the established RFQ workflow of many desks and will continue to grow into 2023. The EMS’s ability to combine these connections with other data points available to the buy-side and to offer a consolidated pre-trade view of the market while providing intelligent automation capabilities will become crucial in 2023. As a result, I predict that fixed income EMS solutions will emerge into mainstream use and become a mission-critical tool for bond desks, similar to their use in other asset classes.

Alex Nowak, head of Continental European FICC e-Sales, JP Morgan: Since more than one-third of the institutional clients we surveyed in JP Morgan’s FICC e-Trading Survey at the end of last year suggested liquidity availability and price transparency were their key concerns entering 2022, we focused on enhancing the tools provided to clients to navigate these markets and to reinforce cross asset systematic trading capabilities. Due to the benefits clients received from real-time monitoring tools in FX spot and how it impacted their usage of orders versus risk-transfer, we see rising demand for more functionality and interactive capabilities in FX and at the same time greater pre- and post-trade transaction cost analytics in fixed income and commodity markets in 2023. These solutions will come via bank-specific and third-party channels to enrich the execution decision process and address the increasing data needs of traders and portfolio managers alike as well as the data scientists who support those trading efficiencies. Algos are set to continue to grow by volume in FX due to sophisticated decision-making processes supporting best execution requirements and new demand will arise for these orders in areas like US Treasuries, which are starting to see new solutions developed. Government bond trading will broadly witness changes to trading protocols aided by improved streaming pricing, similar to FX Spot, helping clients with price discovery, reduce information leakage and serve as a steppingstone towards more algorithmic trading solutions.

Chris Bruner, chief product officer, Tradeweb : The electronification of the credit market is truly taking shape and we’re seeing a unique change beginning in that space. In 2023, expect to see more focus on large-scale risk transfer in credit as opposed to single security trading. As the tools and analytics needed to make this kind of trading more efficient becomes available, expect to see more portfolio managers adopting this approach. Large-scale risk transfer will represent a fundamental shift in the structure of the credit market as traders increasingly view it as transferring baskets of risk with a desired set of characteristics. Packaging up trades provides investors with greater certainty that trades will be executed and when you combine this with the rise of automation, we know we’ll be seeing a lot more of this kind of trading in 2023. 

Jim Kwiatkowski, CEO, LTX (a Broadridge company):

The capital markets industry experienced a particularly volatile 2H 2022 as investors grappled with a looming recession and peak inflation. This year will be remembered as the year when market participants were forced to adjust to a drastically different environment due to a hawkish approach from the Fed, the war in Ukraine and persistent supply chain issues altering the trading landscape. The US corporate bond market was not unscathed by these challenges, which will continue to have ripple effects well into 2023.

We expect the Fed’s tightening of monetary policy to continue, with the process ending in the first half of 2023 and interest rates and inflation remaining relatively high throughout the year. We expect high rates and recessionary concerns to continue to hold back the new issue market. Amidst these conditions, the availability of secondary market liquidity will be a key challenge that market participants will continue to solve for in 2023. We expect to see electronic bond trading reach record levels with the employment of innovative artificial intelligence (AI) and technology that increase transparency while minimizing information leakage. We also anticipate the further adoption of advanced trading tools for more efficient e-trading of large orders.

The post The TRADE predictions series 2023: Fixed income appeared first on The TRADE.

The investment round included all existing institutional shareholders and follows its initial Series A for $7.8 million, announced in April 2020.

Amongst TransFICC’s investors are AlbionVC, Citi, HSBC, Illuminate Financial, ING Ventures and Commerzbank Group’s early-stage CVC unit, Main Incubator.

The new investment will be used by TransFICC to expand its engineering teams and to support increased venue connectivity and automated workflows in US Rates and Credit markets. 

New products will also be developed thanks to the new investment, including a complete e-trading system incorporating a trader desktop interface.

In addition, to help support TransFICC’s growth strategy and geographical expansion through new data centres in North America and Continental Europe, new sales and customer support teams will be funded by the investment.

“We have already built a modern, robust and cost-effective alternative to legacy systems, but driven by client requirements we are expanding our product suite to deliver a full e-trading system, which will enable clients to also trade manually using our software,” said Tom McKee, co-founder of TransFICC.

“As we add more clients and automate more complex workflows it is also important that we continue to invest in our technology platform, to deliver fast and scalable technology, which keeps pace with microsecond price updates and provides an audit trail for best execution.”

Last month, TransFICC launched an EU fixed income consolidated tape model pilot with the hope of becoming the preferred technology provider for the bloc. Speaking to The TRADE, Steve Tolan, co-founder of TransFICC, noted that since the model is based on existing market infrastructure, costs and time to market would be reduced.

The post TransFICC closes $17 million investment led by AlbionVC appeared first on The TRADE.

NatWest Markets has partnered with fixed income and derivatives venue connectivity specialist TransFICC to drive its fixed income technology transformation.

Through the partnership, NatWest Markets will use TransFICC’s connectivity and workflow tools as it looks to modernise its fixed income infrastructure and reduce costs for clients. 

TransFICC aims to resolve the issue of market fragmentation by offering banks and asset managers a low latency API, allowing participants to access various trading venues.

“As our rates business continues to grow and more trading is transacted on electronic venues, it is important that we trade with our customers using modern and efficient technology,” said Gary Adams, head of eFI trading at NatWest Markets.

“TransFICC was able to offer fixed income API connectivity and workflow tools, combined with modern, fast, flexible and scalable technology.” 

The partnership follows a string of improvements to TransFICC’s offering in the last six months, recently partnering with trading technology provider SoftSolutions! to deliver a cloud-based trading service in May.

The technology vendor also completed a dedicated enhancement of the Aeron messaging platform to allow for the clustering on fewer machines to improve server utilisation for clients in October last year.

“We are delighted that NatWest Markets has chosen our technology to help manage its fixed income API translation and workflow automation,” said Steve Toland, co-founder of TransFICC.

“Both firms are aligned on deploying advanced technology solutions and contribute to open source projects, which demonstrates a commitment to raising industry standards through collaboration.” 

The post NatWest Markets implements TransFICC API for fixed income connectivity   appeared first on The TRADE.

Fixed income and derivatives venue connectivity specialist TransFICC has partnered with trading technology provider SoftSolutions! to deliver a cloud-based trading service.

Through the partnership, the cloud hosted trading service will offer users connectivity to multiple fixed income trading venues.

SoftSolutions! provides cross-asset market making platforms, including nexRates, a rates execution management system (EMS), XTAuctions, a primary auction platform for dealers, and BestX!, a buy-side EMS for auto execution on fixed income venues.

Through the new service, TransFICC will provide connectivity to most recent version of the cloud-based trading as a service (TaaS) from SoftSolutions! nexRates, which enables request for quote (RFQ) trading connectivity to venues, including Bloomberg.

TransFICC said it supports multiple versions of Bloomberg’s RFQ trading gateways (TNP) to ensure easy migration to the latest version, TNP 3.2, claiming that increasing demand for bid offer list trading (BOLT) workflow for bonds had driven demand for upgrades to trading gateways across the market. 

“With TransFICC providing access to both D2C and D2D markets, nexRates is now able to provide the sell-side with the ability to service client requests as well as being able to hedge or trade out of positions on the inter-dealer markets – either manually or automatically,” said Roberto Cocchi, CEO of SoftSolutions!.

Several cloud-based trading initiatives have been launched in recent months, spurred on by remote working conditions brought on by the pandemic.

Most recent was Cloud9 and Glue42 who confirmed in April that they were partnering to deliver remote voice trading to institutional investors.

The solution will support ‘click to call’ directly from the bank’s CRM or Microsoft Office suite, initiating a call through the platform by Cloud9 with a long-term objective of allowing the solution to capture voice orders via the phone and open a ticked on an order management systems.

“Working with SoftSolutions!, we provide cloud connectivity for the nexRates cloud hosted platform and have successfully completed the Bloomberg API upgrade, making it fast and simple for clients to move to the new gateway and begin trading using BOLT,” said Steve Toland, co-founder of TransFICC.  

The post TransFICC and SoftSolutions! launch cloud-based trading service   appeared first on The TRADE.

The European market in particular is expected to continue to grow quickly, following significant expansion over the past few years, with record volumes and assets now under custody. 

Addressing the underlying inefficiencies in the European ETF market structure, which make it inferior to the US, will be key to enabling this growth. For example, 70% of ETF trading in Europe continues to be traded OTC, which is not cleared and therefore introduces credit risk, high settlement costs and increased risk of trade failure. EuroCCP will continue to engage European market participants in the ETF industry on initiatives aimed at increasing post-trade efficiencies, with a view to supporting further market growth.  
– Cécile Nagel, CEO, EuroCCP

One of the key themes of 2020 has been technology and how it’s kept us all connected during very turbulent times. It’s been a year of real change, what I would call a clean slate moment for financial services, and next year will be no different. I’d expect to see new ways of finding and sourcing liquidity emerge, particularly in the credit space.

Electronic portfolio trading, which we introduced, already does this in a very elegant and sophisticated way, so I have no doubt markets will continue to embrace it. You see, we’re a financial markets technology business and we’ve always invested in innovation, working collaboratively with clients to offer them trading solutions that aggregate liquidity. Problem solving is at the heart of electronic trading, and with greater implementation of data and advanced automation tools, we should reach new digital frontiers in 2021, and I’m very excited about that.
– Billy Hult, president, Tradeweb Markets

The market volatility and subsequent economic uncertainty caused by the coronavirus pandemic earlier this year brought the importance of mitigating FX settlement and operational risks back to the fore. This, coupled with the December 2019 Bank for Internal Settlements report on the rise of settlement risk and other areas of focus such as amendments to the FX Global Code, means it will remain an important topic throughout 2021.

This focus is only one of the factors leading market participants to recognize the need for a strong infrastructure which can mitigate settlement risk from their FX trading activities.

For the buy-side, firms continue to look to deliver best execution, and as part of this, the move away from trading with custodians continues at pace. In a multi-dealer FX trading scenario, settlement risk exposure increases and as a consequence, an increasing number of asset managers are opting to mitigate that exposure by using CLSSettlement. In 2020, we have seen annual growth of 11% year-to-date in asset managers joining the service.
– Alan Marquard, chief business development officer, CLS

Fixed Income trading will continue to migrate from voice to electronic channels in 2021, across rates and credits. Repos will begin to move towards e-trading, driven by regulation and SFT lifecycle actions. This migration will drive further fragmentation – instead of consolidation, there are new venues planned for launch next year, like LedgerEdge. Large scale efficiency programmes will cut deep at trading firms, reducing costs and removing manual processes, which will involve replacing expensive incumbent vendors with modern technology to automate even complex workflows.  

Cloud computing (which passed the test in 2020) is a low cost and scalable solution, which will be used for assets with infrequent price updates – alongside on-premise technology for volatile assets.  Technology outsourcing for commoditised functions, like market connectivity, has already begun and will continue in 2021 as financial firms demand more flexibility in their technology stack, combining proprietary and vendor solutions.
– Steve Toland, co-founder, TransFICC

Central banks will continue their movement toward increased openness and a more responsive feedback loop with a wider range of investors. 2020 saw an acceleration of this trend, for instance, South African Reserve Bank (SARB) launched investor calls following every monetary policy committee (MPC) meeting, and around 200 investors regularly join.

In 2021, we anticipate other central banks will embrace this approach and use new technologies and connectivity to create channels that enable increasingly accessible dialogue with market participants. Should this momentum continue, the result will be a decrease in policy uncertainty and a healthier investor climate.
– Vladimir Demishev, senior fixed income and interest rates trader, Sova Capital

The past year has cemented the importance of adopting robust and scalable optimisation services that help free up scarce capital and reduce the costs of trading. In 2021, we expect increased focus on the transition to risk-free rates, which can be achieved through our market leading compression service, and on the implementation of SA-CCR, where we’re working closely with market participants to optimise risk-based capital.

There are also huge opportunities to reduce funding costs through initial margin optimisation. Quantile’s service operates across cleared and uncleared asset classes, connecting liquidity pools and generating increased capital and margin benefits for clients.
– Andy Williams, CEO, Quantile

The impact of the COVID-19 pandemic focused attention on the need to prioritise middle- and back-office automation, creating a strong case for strategic investment to enable a no-touch processing environment. In March 2020, we saw record volume and volatility, and firms were challenged by the operational backlog and reconciliation required due to manual processes and legacy interfaces.

As we move into 2021, firms have greater clarity about improving operations to better handle sudden increases in volume and volatility, and for ensuring transactions are handled seamlessly throughout the trade enrichment, matching, confirmation and settlement lifecycle. By leveraging a common industry trade processing platform and infrastructure, firms will seamlessly connect to their global community and be better prepared for the next unexpected market event as well as upcoming regulation like the CSDR Settlement Discipline Regime.
– Matthew Stauffer, managing director, head of institutional, trade processing, DTCC

The post The TRADE’s Crystal Ball 2021: Fixed income and post-trade appeared first on The TRADE.