TS Imagine has announced the latest momentum indicators for fixed income electronic trading, per data capture from TradeSmart Fixed Income EMS (TradeSmart), reflecting the broader electronification of bond markets.
Use of TradeSmart’s Click-to-Trade and Click-to-Engage protocols grew 485% and 134%, respectively. The increases indicate a trend towards electronic engagement of algorithmic liquidity via direct connections to dealers. Direct dealer connections via TradeSmart allow dealers to send sharper prices to the buy-side with less risk of information leakage.
Spencer Lee, TS Imagine’s head of fixed income and chief markets officer, told The DESK that this direct dealer connectivity, that allows for the Click-to-Trade and the Click-to-Engage, is “empirically” generating better outcomes. “We see that in the data,” Lee said. “Clients are driving down transaction costs by utilising Click-to-Trade and Click-to-Engage. That is unequivocal. They are also generating less information leakage and therefore less market impact. So, we’ve seen big growth in these protocols, and we’ll continue to see it.”
All-to-all (A2A) liquidity provision also grew substantially, as indicated by a spike of 29% in the RFQ Responding protocol, as well as significant increases in the Order Book and Dark Pool protocols. TradeSmart users can engage across all venues from a single blotter and provide liquidity automatically when the opportunity arises, improving overall execution quality.
“Having been a buy side user my entire career, we have been begging for this type of facilitation in order to engage the dealer, the marketplace, liquidity, in this way,” Lee added.
Lee said there is also “a growing confidence” on the dealer or sell side that pushing content through these channels is becoming one of the most effective, if not the most effective, way for them to distribute content. “They can, through these private connections, send unique information specifically to certain clients and make sure that they see it.”
Additionally, TradeSmart users have continued to increase their usage of automation tools to drive more trading efficiency. This is evidenced by a volume uptick of more than 50% across the variety of automated execution protocols available within TradeSmart, reflecting its role in scalability.
TS Imagine CEO Rob Flatley told The DESK that he thinks the market is ripe for dealers as service providers to offer some operating leverage to the buy side desks. And because the firm covers the broadest spectrum of asset classes, from an EMS perspective, Flatley identifies two growth drivers.
Firstly, buy side firms that are going full multi-asset class. “So, everyone trades everything, or at least multiple asset classes.” Secondly, firms can utilise TS Imagine rather than staffing up. “I think we’re actively engaged with five or six right now that are contemplating technology investments for a long-term operation, who are trading bonds, but less frequently.”
These drivers put a substantial amount of growth ahead for TS Imagine.
“In terms of market share in the EMS space so far, we feel like we’ve only penetrated the market about 5%,” Flatley explained.
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