New IOSCO Report Highlights The Importance of Connectivity for Fixed Income

Interesting report from IOSCO - particularly Chapter 4, which talks about Institutional Fixed Income Trading Platforms.

"API integration has provided large efficiency gains to the sell-side by allowing integration between the platform and market-makers’ internal workflows. This integration has enabled the more technologically sophisticated market-makers to build hub and spoke systems, with a single core pricing and risk engine connecting to and interacting with multiple external platforms...."

"However, many APIs were developed using the proprietary technology of each platform, as no common technology standards existed in fixed income for the standardized creation of such APIs. These proprietary APIs have imposed significant technology costs on the sell-side, as each connection to a platform has required a substantial investment in technical resources to implement the proprietary technology stack. Furthermore, proprietary APIs have hampered integration with the buy-side, given the typically more limited technology resources available to the buy-side."

Hayley McDowell, at The Trade, also writes an interesting piece about IOSCO's report. She writes, "As of January this year, 128 bond trading platforms were available to fixed income market participants as traders seek new technology to improve connectivity and electronic trading."

"The now fragmented nature of the fixed income market with increased electronification has raised the importance of integrating multiple platforms to allow re-aggregation of liquidity across liquidity pools."

The Trade article can be found at http://www.thetradenews.com/Asset-Classes/Fixed-in...

The complete report is available at https://www.iosco.org/library/pubdocs/pdf/IOSCOPD5...