Fixed Income Focus | Gherardo Lenti Capoduri Fig 1: Number of trades (m)
10 12
0 2 4 6 8
2007 2008 2009 2010 2011 2012 Fig 2: Turnover (€m)
400,000 450,000 500,000
50,000 100,000 150,000 200,000 250,000 300,000 350,000
0 2007 2008 2009 2010 2011 2012
blended and made unique with a broker’s choice of technology.
On the market-making side, investments were made in order to compete in a more transparent environment. Both the Hi-MTF and EuroTLX successes show that there is an appetite by market-makers to provide liquidity on these markets. What is key is that in a structurally illiquid market such as fixed income, both cater to the specific needs of the market-maker by building their
market microstructure around the presence of a market-maker. Hi-MTF is only quote driven – the orders hit the market maker’s bids and offers, whereas EuroTLX is a hybrid, quote and order driven microstructure where market-makers have an obligation to be present on the book all day for a certain level of protection through the presence of anti-gaming rules.
Banca IMI launched Market Hub, its multi-asset electronic trading platform, in 2007. The asset classes available from the
“We believe that the industry, once the resistance to regulatory change has been overcome, will find innovative ways to adapt.”
start were equities, fixed income and listed derivatives. FX was added in 2012. In fixed income, in addition to Banca IMI’s high touch service, it offers best execution and access to over 20,000 bonds by connecting to trading venues, OTC liquidity providers and offering additional liquidity on Banca IMI’s systematic internaliser Ret Lots Exchange.
European regulation MiFID II is expected to introduce many of the changes to the fixed income market structure already experienced in Italy. Of course, it won’t be exactly the same, and the market will not react in exactly the same way,
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Best Execution | Spring 2013
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