Intercontinental Exchange, (ICE), has relaunched ICE Risk Matching Auction (RMA), an enhanced sweeps session-based protocol for dealer-to-dealer fixed income trading, which ICE president Peter Borstelmann tells The DESK is just the first step towards offering other non-sweep trading protocols.
ICE RMA, which was initially launched in 2017, is part of the ICE Bonds’ suite of trading protocols, and now conducts multiple auctions each week, with 50 registered firms and more than 400 users with access to the protocol.
Speaking to The DESK, Peter Borstelmann, President of ICE Bonds, said the firm saw this protocol as a key element to expanding and strengthening its relationship with the dealer community for institutional corporate bond trading. “This allows us to establish a network of deep and reliable liquidity providers and serves as a stepping-stone for us to expand to other non-sweep trading protocols where buy-side accounts can interact.”
Using ICE RMA, after traders upload their inventory of bonds, an ICE proprietary algorithm matches buyers and sellers of the same bond or list of bonds.
The protocol leverages ICE’s Continuous Evaluated Pricing (CEP) to propose a pricing level for the bonds, which traders can either confirm or reject on a line-item basis or in bulk. This process gives customers an efficient way to reduce risk exposure as they access a broadening pool of fixed income liquidity.
“We positioned our new solution alongside our market leading ATS platforms, giving traders the ability to access that liquidity after sessions to manage tail risk via any of our existing protocols,” Borstelmann continued.
“While still early in our relaunch, the adoption and activity levels are quite encouraging and are ahead of where we anticipated at this stage,” Borstelmann told The DESK.
ICE Bonds offers growing pools of liquidity and multiple trading protocols including click-to-trade, request-for-quote, sweeps and portfolio auctions for US municipal, corporate, treasury, agency, MBS Pass-throughs, emerging market and sovereign bonds and certificates of deposit. ICE’s CEP provides front-, middle- and back-office professionals with streaming intraday fixed income evaluations and offers greater pre-trade transparency for price discovery and idea generation.
Borstelmann said that while the firm realised the sweep space was crowded, “it was clear that a strong alternative to the incumbent had not yet emerged”.
“We were confident that with our assets across execution and data, we could deliver a more modernised solution that would deliver strong risk proposals while offering a more cost-effective option.
“Though we don’t provide specific volumes, we do continue to see sessions with proposals of over 30k bonds and $18bn+ notional. We are also continuing to expand our network of users and expect to see substantial growth as traders become more acclimated to the protocol.”
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