TransFICC Features in The Desk

Steve Toland talks with The Desk about automation in Fixed Income and new regulation.

A short excerpt -

Q - Workflow automation is a key industry trend. How far has the market progressed with automation?

A - Workflow automation is just getting started in fixed income. In rates, connectivity and auto negotiation is already well serviced by technology, but in less liquid assets and more complex workflows, the market is still dominated by manual processes.

Credit venues have seen a marked increase in all-to-all (A2A) trading volumes over the past year, and the growth of this protocol is compounding the need for liquidity providers to autoquote RFQs to clients.

But dealer-to-client (D2C) Credit trading venues each support multiple RFQ negotiation workflows, and all are different, making it difficult for banks to build automated negotiation systems to respond to client RFQs. It is a complex and time-consuming process to automate as all state transitions need to be mapped, codified, tested, and maintained.

The good news is that many of these workflows can now be automated, and tools to access these pools of liquidity for both liquidity providers and the buy-side have evolved. The growth of A2A trading is continuing to blur lines between the role of price makers and takers.

Q - What are clients asking for in terms of increasing workflow automation?

A - In a recent Greenwich Coalition survey of buy-side clients in the US and Europe, auto-quoting topped the list of what corporate bond investors would like their liquidity providers to focus on next, particularly in less liquid credit bonds.

For banks providing liquidity, a few of our dealer clients have identified the need to automate small value client ticket requests.

Banks often receive more than 10,000 RFQs a day and 80% of these are smaller in size than USD500,000. Although small in value, the volume of small RFQs is growing and dealers are looking to automate these RFQs to increase efficiency, reduce client waiting time, and enable trading desks to focus on larger deal sizes.

Banks cannot manage this volume unless they automate and extend auto-quote capabilities. Automation is becoming essential, not just a nice to have.

The complete Q&A is free to read at The Desk - https://www.fi-desk.com/indust...