16 Jul

Profit & Loss Talk Series - TransFICC

A few highlights -

"There are quite a few similarities with FX, the APIs do the same thing in delivering market data and orders, and a lot of the post-trade work is the same, but the level of fragmentation in fixed income is much greater, because not only do you have venue fragmentation, you also have asset fragmentation."

"There is massive pressure to cut costs at the major dealers especially, for example there are the Basel II requirements where they can't hold a lot of bonds on their books. That changes the structure of the market – it leads to more all-to-all trading venues in fixed income, which are being established. The problem is, these venues are struggling with poor liquidity – we think we can help them."

"Fixed income as an asset class is anything from two-to-10 years behind FX in terms of the market structure but it is catching up quickly, helped it has to be said by a lot of people moving in from FX."

"The incumbent in this space is ION Trading, which has about 70% of the sell side banks and by building out this connectivity, we have set ourselves up to compete in this space – it’s kind of a David versus Goliath!"

Many thanks to Profit & Loss.

The full article -