24 Jun

FILS - The View From Philadelphia

Steve has just come back from the Fixed Income Leaders Summit in Philadelphia, where he presented “What Fixed Income can Learn from Gaming and Netflix"

Firstly, it was a great conference, with a good mix of attendees. Three key themes caught his attention:

1. The Changing Market Structure -
Whilst market structure is always a discussion topic, there was a lot of talk in Philly about the new ways to access liquidity in addition to RFQ. Comments included:

Dan Viener, Blackrock - “We need Banks as LP’s and for Risk Transfer, but we are now more strategic in who we partner with…..We are now looking also at Non Bank LP’s and our relationships with venues, which have widened from the three primary RFQ venues to include dark pools and auction venues”

Mark Bruce, Jump Trading - “We try to customise our liquidity to each venue”

Bryan Farrell, Liquidity Edge - “Tailored liquidity suits different trading needs”

Steven Bartfield, BrokerTec - “Volumes have held up in our Order Book but there is room for a streaming models”

Michael O’Brien, Eaton Vance - “It is useful for us to have different tools and different models. I want to use CLOB, RFQ and Streaming”

2. The Growth of Portfolio Trading -
This was mentioned by several speakers, who highlighted portfolio trading being used to efficiently match particular strategies, improve the speed of trading, increase the breadth of liquidity, or even to reduce the errors that occur with trading single line items. Although only two years old, an on-site survey showed that about 30% of market participants are using this method of trading, particularly in the USA.

Lee Sanders, Axa - “The US is way ahead of Europe on Portfolio Trading”

3. Automation, Data Science (and Artificial Intelligence) -
As with previous years, technology and data science were seen as the key drivers behind the continued evolution of Fixed Income. It was interesting to hear Supurna VedBrat from Blackrock, talk about the upcoming changes in trading - the abundance of trading data from multiple sources, and how data science is being deployed to monetise this information - plus how AI is just starting to be used, but is expected to scale rapidly over the next few years.

Separately, the guest speaker, General David Petraeus was excellent, and congrats to Geoff Fite of Fite Analytics who won the FinTech Shark Tank.