The evolution of bond trading, through the smart application of technology and increasingly sophisticated market making is promising to deliver better execution, said Lynn Challenger, global head of trading and order generation at UBS Asset Management, speaking at TradeTech in Paris on ‘How can you future-proof your technology strategy in a world of mergers, changing market structure and new market opportunities?’
“The market is changing very rapidly In fixed income trading through the use of more electronic technology,” he said. “Rather than just relying on banks to use algorithms to price bonds, they are feeding prices automatically for you to trade. Along the way we realised “Why do we have to trade via platforms like Tradeweb or MarketAxess, we can connect directly to banks web the market access to get that data directly to banks. We had the capability to aggregate that data – or our technology did – so why not leverage that and use the technology to stream in the price of a bond and click to trade? We don’t have to request for quote (RFQ) anymore, now we get pre-trade transparency and we can just go ahead and trade.”
Asked which technologies he expected to see have the greatest impact on trading in the future, he noted that the capacity to bring information into a single point, and to directly stream prices from a wider range of market makers would be net positive for traders.
“Aggregator technology is going to be big,” he said. “I think the evolution of exchange traded fund (ETF) liquidity will have a huge impact on markets. ETF market makers are already providing a lot of liquidity in the market, but now they’re starting to provide it directly to end users. That shift is going to change how we interact with them.”
©Markets Media Europe 2024
