My main takeaways -
- Several panelists said there would be more fragmentation in the Fixed Income and Derivatives markets - even more than the current 130+ platforms! Fragmentation will also impact voice brokers, which will operate OTF’s (Organised Trading Facilities). Fragmentation comes with Pros and Cons, best summarised by a Buy-side panelist, who said, “It's good to have execution choice, but you need to have good technology / OMS / EMS systems in order to aggregate liquidity”.
- The majority view was that RFQ models will still dominate in the Dealer to Client space, but there will be a role for All-to-All CLOB’s (Central Limit Oder Books). Whilst 150,000 different bonds make CLOB's difficult in Fixed Income, i-Swap was used as a example to demonstrate how a CLOB can gain traction.
- In the Keynote, it was noted that the regulators, “….did not intend to equitise the Fixed Income and Derivative markets”.
- Reports from FIX sub groups on Transparency, Reference Data, Best Execution, and Order Data and Record Keeping are a useful barometer to gauge progress in these areas. The Reporting workflows from the Best Execution group are particularly worth looking at.
Other worthy quotes rom the day -
"Credit - only 2% of Corporate Bonds meet the liquid threshold”
"Workflows must be digital. Trading has to be on a venue”
“We need to implement the coming regulation to a standard"
And as I was heading towards the bar I was stopped in my tracks, as Sean Fitzpatrick started to speak. A charming and interesting speaker, Sean held everyone’s attention with stories about his time as captain of the All Blacks, team discipline, respect for the opposition, and most particularly the honour associated with wearing an All Blacks shirt. A great keynote speaker to keep people’s attention at the end of the day.