Speaking with The Desk about Managing Fragmentation in Fixed Income
Steve spoke with Dan Barnes from The Desk about managing fragmentation and complexity in Fixed Income markets.
A couple of highlights -
- In the fixed income markets we have fragmentation between asset classes; rates, credit, futures, repos, etc. Then we have further fragmentation from the regional differences and different markets. Trading platforms can then have multiple APIs for each product to handle aspects like streaming prices, request for quotes, CLOB and post trade workflows.
- Complexity is increased by different trade types (outright, switch, butterflies) and further by different trading protocols e.g. RFQ, RFM, Process, Click & Trade, Trade at Close, NC Lists, All or Non Lists, Compressions etc. For more complex products, such as mortgage-backed-security specified pools, the buy side might send across anywhere between five and 50 bonds at a time to get priced up by the dealer, with four different ways to negotiate the price. That price needs to be referenced against a benchmark later in the day. The process of haggling over a package of 50 bonds, back and forth via spreadsheets, is ripe for automation.
- Complex requirements frequently mean that when you start building systems the end spec is not 100% clear. Often, if you try and get all the requirements upfront, you are going to get it wrong. So, our development team tries to build a small part of the functionality first and then build out from there. The cloud also allows you to scale your infrastructure as needed to meet evolving functionality and system throughput needs.
The full interview is free to read at https://www.fi-desk.com/how-ba...