In the 2024 Trading Intentions Survey, 53% of respondents reported being users of Neptune’s electronic axe distribution platform, with 24% counting themselves ‘major users’, indicative that it is more a ‘must have’ than a ‘nice to have’. Given the firm only sits behind the big three trading platforms as larger providers of pre-trade data, it is punching above its weight as a platform with a single type of pre-trade information.
“While we’re the fourth most-used pre-trade data source, we still only provide axes,” says CEO, Byron Cooper-Fogarty. “Of course, we have been expanding what we can provide within that relatively tight remit. A big growth area for us over the last 12 months has really been the proliferation of algo axes on the platform from dealers. The huge amount of growth in that area, as seen across the industry, initially started as relatively small sized axes. That is now starting to become materially larger. While it may not match the size of axes voice traders put out, it’s become a significant chunk of the data we carry in credit.”
Firms with headquarters in the US (distinct from those trading only in the US) are 62% Neptune users, and half of those are major users, which Cooper-Fogarty notes is indicative of the quantitative trading functions being developed in US-led operations.
“We spent a lot of time on our portfolio analytics functionality in the front end, which can be used to do relatively high-level liquidity analysis based on a portfolio, which by its nature lends itself to a more contrarian approach to portfolio trading (PT) as well,” he says. “That protocol has become a big part of the market in credit over the last couple of years and is getting bigger, probably being the only new protocol in the last decade, that’s made a real difference to buy side traders. We launched our latest iteration a couple of weeks ago, and that’s gone down really well.”
Neptune continues to expand the products and services it offers, so that the functionality that traders need evolves with the way investors and traders engage with the market.
“We’re currently looking at more effective ways to search the axe data,” he says. “Some days we’ve got over 200,000 axes coming through the platform, so given the huge number of criteria you can search for bonds with, we’re developing a ‘smart search’ tool.”
The firm’s independence not only makes its success as a data source more outstanding, but also gives it independence in connectivity, which gives it greater flexibility in adoption.
“What shines through, is we can continue to be dedicated to providing the connectivity that the buy side needs, whether that’s via OMS or EMS,” says Cooper-Fogarty. “We’re not wedded to our own interface. The people that use us the most on the buy side, tend to have access to data through more than one path. What a trader, a portfolio manager, and a quant needs are going to be different. Neptune’s principles are flexibility and trust.”
This will play out in the year ahead, as the firm sees greater engagement from more systematic trading firms on the buy-side, and alternative liquidity providers.
“Connectivity and flexibility are necessary to be able to service those new types of investors or market makers,” he says. “Over the last six to 12 months, we’ve seen a lot more interest from quant hedge funds, specifically focused on credit. As the positions that a lot of the alternative liquidity providers are holding get larger, we expect to see more coming on board.”
Looking at improving the trust in data sources and accessibility will see Neptune engaging in more granular information to support the quality of execution.
“Our immediate focus is connectivity, data quality and big growth areas like portfolio analytics and algorithmic axes,” says Cooper-Fogarty. “A big project looking ahead will be more granularity on axe flags. We want to explore that over the next 12 months as a different way to add colour around what’s behind an axe to help with buy-side and sell-side engagement.”
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