LSEG has built a suite of services that can be used with minimal friction and maximise the capacity to trade effectively.
As clients face a highly uncertain market, LSEG is seeking to minimise the risks they face in delivering new capabilities while focused on effective trading. Emil Parmar, director of credit trading solutions, and David Rickard, director of rates trading solutions at LSEG outline how their users will benefit.
How are you developing capabilities in credit and rates markets?
David Rickard: The exciting news this year at LSEG has been the expansion of Workspace into our trading communities. Workspace is our next generation workflow solution. It delivers our full range of data, news, analytics, and workflow tools, and comes at the perfect time for our clients as they navigate challenging market conditions across fixed income.
Workspace runs on fast, lightweight technology, enabling our clients to access our capabilities without sacrificing accuracy or resiliency. It brings updates for our search algorithm tools, making it easier for clients to navigate our data. We can also support our clients in building their own curated views and workflows, which can adapt to their day-to-day requirements. Finally, because openness is a critical product value at LSEG, Workspace is available across a wide variety of channels, meeting clients where they live rather than trying to force them into a narrow ecosystem.
Emil Parmar: Within the Workspace desktop environment as well as through our enterprise feeds, which includes Analytics-as-a-Service via APIs, we are continuing to build out the robustness of our credit market data solutions, with a key focus on curves. This effort allows us to more accurately price and develop curves for issuers in all regions at various frequencies.
With the attention market participants have had on fixed income this year, the importance for evaluating default risk has been top of mind for many. Access to fair and reliable curves is necessary to navigate where spreads are being impacted.
We’re especially investing to develop back-end services that allow us to construct pricing closer to real-time to match the demand from clients to evaluate instruments, beyond end-of-day position marking. Doing this at scale is quite an undertaking, which entails layers of quantitative analytics and being able to deploy these outputs across the LSEG infrastructure. Beyond Workspace, this favours our evaluated pricing services, and intersects with our benchmark and indexing solutions at FTSE.
How are the services you’re providing supportive in volatile markets and in facing rapid interest rate changes?
DR: From a sales and trading viewpoint, the markets have been dominated by the inflation story, and the consequent rise in rates for the past 12-18 months. Many will not have seen this environment in their trading careers. The capabilities and services that we deliver, particularly the breadth and depth of our data sets, have added significant value for our trading clients across the buy and sell side.
In addition, our extended client base, including central banks, consultants, various financial institutions and corporate treasuries have utilised our datasets and analytics capabilities. These analytics capabilities include our swap and bond calculators, which can be used to accurately value complex trades. Clients are also regularly accessing our interest rate curves to track and monitor what markets are pricing for the next central bank policy.
EP: When it comes to supporting liquidity, there’s not a one size fits all solution so we’re developing views that are curated by client or user, to have a more well-rounded assessment at the instrument level. We get a lot of questions around liquidity scoring and analytics.
At LSEG we pride ourselves on partnerships with solution providers, including execution venues, who have their own view of what a liquidity score is. We appreciate the workflows that our clients are looking to solve for, which can vary by persona, and hence offer something of a warehouse of scores to allow clients to determine the best fit. These are of course available via both Workspace and our APIs.
To assess the difference between scores you can assess a solution provider by its methodology and strength in a given market segment. Tradeweb is an example of being a first mover in starting to break out liquidity scores for European credit and emerging markets by publishing segregated bid and ask liquidity scores. It’s easy to appreciate the liquidity to buy versus sell are two different workflows, so unpacking the roundtrip score helps to deliver a sharper view.
DR: In rates, we’re seeing a strong demand from clients in emerging markets, particularly for greater transparency in pricing. For this client base, we’ve seen an accelerated trend in digitising workflows, driven by regulatory and competitive pressures to determine best price and remove the risks inherent in manual workflows.
An example of the solutions we deliver would be our partnership with Tradeweb to provide real-time interest rate swap data, for a variety of emerging markets, delivered across desktop and feeds. These datasets are particularly relevant in tackling liquidity and price formation in the current unpredictable markets as rates rise to levels not seen in decades.
How are you helping to minimise friction in trading?
DR: Clearly fixed income markets are already fragmented – and we’re focused on helping solve that problem. For example, our recent partnership with OpenFin, demonstrates our commitment to reducing friction in workflows and delivering a seamless user experience. We’ll leverage the OpenFin technology to deliver capabilities with choice and flexibility in building workflows, agnostic of vendor or application. This will remove friction in day-to-day activities without any sacrifice to a user’s existing preferences.
In addition, our work with Microsoft represents a real step change for the industry. Over the coming years, we’ll deliver enhanced interoperable capabilities for clients across Workspace and Microsoft Productivity Apps, including Teams, Excel and PowerPoint. This will create a seamless workflow experience, leveraging our data, analytics and collaboration solutions, generating a powerful network effect for clients with buy-side and sell-side counterparties coming together in a variety of trading workflows.
EP: The decision to trade a particular bond requires considerable analysis to select an opportunity at a thematic level, whether it be sector related or by rating buckets, or individual line items. To help with this we’re building out smoother relative value analytics with the ability to compare bonds so you can achieve the best possible yield or total return outcomes.
In Workspace it’s becoming easier to observe dislocation and study mean reversion levels, to bring opportunities into focus, and pair analytics with execution workflow tools such as our cross-asset execution management system (EMS), TORA. Our diverse user community has a spectrum of execution needs and demands for different instruments, supporting integration of our EMS capabilities into Workspace.
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