Fixed Income Focus | Dan White
counter aggregators. So that RFQ price might not be the best price. The buyside firm needs to be able to obtain the best price in the market regardless of trading protocol, but also manage the workflow using automation.
What our system does for the buyside is that it allows users to access markets from any available RFQ channel and OTC aggregators and exchanges, and displays those prices in one platform, saving on screen real estate. In addition, we provide some algorithms that are designed to optimise trading, using the trading protocols that are accessible by the buyside. We basically give the user the ability to send out an RFQ, but we’ll also aggregate the prices that are available electronically, and we’ll allow the user to decide based upon what prices are available from all sources. We also allow the users to leave bids and offers with their sellside firms to expand their liquidity reach to other buyside firms under the sellsides’ price distribution capability to their institutional customer base. On the sellside, there is a situation with sellside firms, where the balance sheet has been compressed. These firms still have an enormous account base and franchise, as well as order flow coming from a diverse set of clients. Our system will allow the sellside firm to act as an agent in riskless principal format or enhanced riskless format, taking small positions through
Best Execution | Spring 2013
“The larger number of electronic trading platforms creates a greater need for simplified connectivity to all firms, and it’s very difficult for buyside firms or any firms for that matter to connect to all of the different sources out there.”
upsizing and simultaneously selling the position.
Could you define best execution in the credit markets and how do your offerings help achieve best execution?
For best execution, it is essential that the buyside is able to defend its position and the trade that it did by showing that it took into consideration all prices from all sources that were available, so if a better price is on an exchange than on an RFQ, for example, they can support their execution on the exchange.
How does the growth in the number of electronic trading platforms impact the problem of accessing liquidity? The larger number of electronic trading platforms creates a greater need for simplified connectivity to all firms, and it’s
very difficult for buyside firms or any firms for that matter to connect to all of the different sources out there. So it is helpful to have a single integration point with a firm that’s already connected to all of these platforms so they can access all this liquidity from a single protocol or a single screen.
In terms of the growth of electronic trading how do you see the market evolving over the next five years? I think there will be a simplified work flow with respect to completing all the connectivity links to all the parties. There will also be this broadening scope of trading protocols, and I think that best execution protocols need to evolve so that buyside firms are taking into account all the prices available from all sources. This can only be done in a fully transparent electronic venue. ■
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