Consistently rated as the most effective platform for finding liquidity in the corporate bond market, MarketAxess has frequently been ahead of the market in terms of its data offerings and trading protocols.
“Our innovation agenda has ensured that we continue to be disruptive in a positive sense, pushing boundaries so that clients are confident in having our support into the future,” says Gareth Coltman, global head of trading automation at MarketAxess.
In 2020 the firm’s all-to-all trading protocol Open Trading was its key differentiator and since the sell-off in March 2020 it has continued to boom as a way of finding liquidity. As a pre-trade source CP+, MarketAxess’ composite pricing tool, has also seen great success with some growth in use to reach 66% of traders this year and a full 25% of traders reporting themselves as major users of it as a tool. It has also succeeded in delivering innovation in combination with other protocols.
“In addition to Open Trading and the positive results we have seen from that over the past year, we have sought to look at how clients can find liquidity in our existing markets and how we can expand into new markets,” says Coltman. “We’ve seen success with the Live Markets protocol, the Mid-X protocol in Europe as well. That is why clients find us the most efficient.”
The use of Live Markets, which provides a single view of two-way, actionable prices for the most active bonds on the platform and Mid-X, a session-based protocol which allows firms to trade against the mid-point price established by CP+, are both in evidence in the preferred execution options that traders report with 9% auto-executing and 4% trading against streamed prices, coming from nowhere in 2020.
While all-to-all trading is the second most commonly-preferred protocol on MarketAxess, at 34% of traders it has only increased slightly on the previous year and giving credence to the firm’s emphasis on honing its existing model.
“We have seen growth in Open Trading last year and it has been great that clients saw us as part of the solution to find liquidity in March,” Coltman notes. “Mid-X was launched in response to feedback from clients to have a solution where they had less urgency but the desire to achieve price improvement and meet natural liquidity. There are different mechanisms out there and we effectively built this on top of our open trading network to give the greatest access to liquidity possible and using CP+ which has become an industry standard around pricing. Therefore, Mid-X is almost an obvious solution.”
The firm has been running twice weekly sessions since mid-October and in February ran a month-end session as well.
“That was super successful,” says Coltman. “We’ve had broad participation across dealers and buy-side, with a roughly 60% to 40% split and our intention moving forward is to see how we can bring that beyond eurobonds into other markets, to take that type of matching technology into other areas, with variations in frequency and timing.”
Having acquired US Treasury trading platform LiquidityEdge in 2019, the firm has proven it has the capability to expand across asset classes as well as geographies and trading methods. It is this capacity which has helped the MarketAxess venue to be perceived as the most likely to be used in 2021, 2022 and out to 2025.
“Clients have confidence in us moving forward, because we continue to innovate,” Coltman observes. “Client expectation is that we will bring similar levels of innovation around liquidity and price discovery into the new markets which we are expanding in to as well, for example CP+ in European government bonds (EGBs) which has just rolled out.”
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