Last week, the Fixed Income Leaders Summit in Boston sparked new conversations about the future of Fixed Income, including the importance of relationships for liquidity. A great article from Markets Media curates this conversation into one simple message - there will always be parts of the market that will require real people in the mix to negotiate the fine detail. “Relationships are still important”, the article quotes, from Gregg Moore, Head of Trading, Americas Fixed Income at Schroders. 

This is something we are acutely aware of from our markets experience, and why LiquidityChain has been built to be ‘hybrid’ - a combination of smart technology and human relationships, to leverage maximum liquidity. 

Our system leverages innovative technology to automate manual processes and maximise operational efficiencies to generate optimum possible trading opportunities, but once an opportunity is confirmed, an experienced broker will convert them into deals outside of LiquidityChain. 

This hybrid approach gives market participants the best of both worlds. 

We are currently working with one of TP ICAP group's regulated entities in Dubai to bring our hybrid offering to the MENA bond market. To find out more, contact one of our market experts.

Read the full article from Markets Media below, or on their website

"Has the growth of electronic fixed-income trading platforms reduced the buy side’s need for close relationships with their dealers when sourcing liquidity? Like many relationship descriptions, the answer is: It’s complicated.

“I still think that relationships are still very important,” said Gregg Moore, head of trading, Americas fixed income at Schroders, during a liquidity-fragmentation panel at the Fixed Income Leaders Summit in Boston. “At the same time, we have to prepare for periods when it goes away. We’ve seen very small episodes of that in the last few years.”

It truly depends on which bonds someone is trying to trade, added fellow panelist Steven Divittorio, managing director, head of US high yield trading at Barings Asset Management.

The market is bifurcated, according to Divittorio. “There is a liquid part of the HY market that will trade a little tighter, and then there is a particular part of the market, such as in CCCs and Bs, where you have to talk to someone about those,” he added.

 For firms like the Capital Advisors Group, whoever supplies liquidity is not as important as the liquidity itself.

“We are looking for best execution,” said Anthony Cucinotta, head of trading at Capital Advisors Group. “We don’t care if we are getting from a platform or a dealer. But I would say that the service level has increased on the dealer’s side.”

Where technology has removed some of the buy side’s dependency on the dealer community, it remains a two-edged sword noted James Switzer, global head of credit trading at Alliance Bernstein.

“For me, there is a lot of ways that you can look at fragmentation,” he said. “But the fact is that we have to trade bonds in smaller pieces to be able to keep our transaction costs at bay,” he explained. “We cannot trade large blocks in bilateral negotiations without pushing the trade further away.”

Switzer also advised the room that the buy side should not wait for alternative capital to arrive and replace the buffer capital that firms have lost in recent years.

“I believe that alternative capital is not coming, so we have to find new ways to find liquidity,” he added."

Richard Smith

Richard Smith
Founder & CTO


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