Market operators seek to expand reach of surprisingly resilient automation.
Fixed income trading has become much more efficient over the years, driven by new technologies and electronic processes, and further advances lie ahead. That is according to speakers at the Fixed Income Leaders Summit in Nashville, who indicated that while growth in e-trading has paused over the past 12-18 months, there are tailwinds to support the continuation of the broad, long-term expansion.
Tradeweb CEO, Billy Hult, spoke at FILS Thursday afternoon, shortly after predicting on LinkedIn that there will be massive transformation and innovation in trading over the next five years. Hult, who took over as CEO this year after being the company’s president since 2008, said that he “has been part of a long ride in change and innovation” in the industry, driven by gradually increasing transparency that has made for more efficient markets. “If you’re fighting that, you’re not going to last.”
More recently, the evolved, more transparent and automated fixed income market structure has been tested by stressors such as the COVID-19 pandemic in 2020 and then sharply rising interest rates in 2022. Hult noted that “significant segments” of the fixed income business still use the phone, mainly for large, market-moving, significant risk trades. Market operators such as Tradeweb need to “figure out how to break down those trades into more digestible forms” that can be transacted electronically. Prior to Hult’s discussion, a FILS panel on automation covered ground on how data and technology can reduce manual processes.
Gareth Coltman, global head of automation at MarketAxess, said that certain workflows might be 80% or 90% automated, and the firm is working to increase that to 90% or even 100%. Automation has proven “more resilient than clients expected” through many different market conditions in recent years,” Coltman said. “Automation is a necessary part of the market,” he added. “It’s something that people have built businesses around, and it’s becoming more ubiquitous.” The DESK
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