Weekly Roundup - We Are All Dealers Now & The Bright Road Ahead For APAC Market Data

These articles argue that more Fixed Income trading will move to electronic venues, even in corporate bonds, and that the volume of market data will increase, even in APAC. We agree.....Further validation that the Fixed Income markets need robust, scalable and faster technology to support market growth.

The Economist - Digitisation Shakes Up Corporate-Bond Markets
This article highlights the growth of all-to-all e-trading in corporate bonds, driven by the changes in market structure, namely demand for increased automation, changes to capital requirements and regulation. Whilst this is not “new” news, TradeWeb’s announcement about launching its own all-to-all platform may prove to be a tipping point, leaving Bloomberg the odd one out (at least for now).

All-to-all trading has the potential to change bond-market dynamics, where all users are able to trade directly with others, irrespective of whether they are a dealer or asset manager. Pioneered in 2012 by MarketAxess, currently asset managers provide 39% of the liquidity and dealers 29%. Asset managers have moved from being price-takers towards being price-makers. Momentum in all-to-all e-trading is building, with MarketAxess, Liquidnet and Trumid, offering this method of trading. Plus, TradeWeb has just announced it will launch its own all-to-all platform leaving only Bloomberg without an offering of its own.

Another factor that will change the structure of the bond market is MiFID II, which will require market participants to report the prices and approximate volumes of all completed bond transactions at an unprecedented level of detail. The complexity of this undertaking will also push more trading onto electronic platforms, which are busy embedding automatic reporting.

there is also a further potentially transformative trend: full automation. Tradeweb has already introduced a number of protocols that allow the preprogramming of a series of trades: eg, selling one bond and buying another with the proceeds; or arranging currency hedging. MarketAxess has even seen expressions of interest from hedge funds wishing to trade bonds using algorithms. Full automation has brought a lot more liquidity (and volatility) to other markets. In the world of corporate bonds, the impact could be far-reaching.

The full article is available at http://www.economist.com/news/finance-and-economic...

Markets Media - APAC Market Data In Focus
This comment piece looks at the growth of market data in APAC, driven largely by increased automation and trading firms looking to access more data directly from the source. The author provides an overview of changes to data in capital markets, where the availability in APAC has lagged that of EMEA and North America, mainly due to geographical, cultural and regulatory fragmentation. However, with more e-trading and solutions from FinTechs this is becoming less of an issue, meaning that the volume of data is increasing.

Historically Asian financial services have been slow in the uptake of market data solutions. Over the last year the rate of growth has increased, as investment firms look for global expansion and Asian exchanges seek to expand their liquidity sources.

There is also a trend by APAC firms increasingly wanting direct connectivity, through feed handlers, so they can access market data from source, for example directly from the exchanges. So whilst the spend on market data is indeed shifting, if we incorporate the rising popularity of direct feeds as well, the potential for growth is even greater than initially thought.

Additionally, as the electronification trend continues on trading floors across the region, this is going to drive further demand for direct market access and direct feed handlers. This is more of an established trend in Europe and North America but one that now certainly seems to be replicating in the APAC region, given the wider geographical fragmentation of markets and services.

The full article is available at http://marketsmedia.com/apac-market-data-focus/?ut...