Broadridge Financial Solutions subsidiary, LTX, has launched RFQ+, an enhanced RFQ protocol which combines pre-trade dealer selection analytics with liquidity aggregation capabilities.
The new protocol, which was developed to reduce information leakage, builds on existing RFQ workflows and facilitates larger trades through the aggregation of multiple dealer responses for their desired amounts.
The move follows the recent launch of BondGPT, powered by OpenAI GPT-4, developed to help simplify workflows and increase efficiency for users’ bond selection and portfolio construction processes – which sees LTX build towards the next generation of AI-enabled workflows.
“RFQ+ combines AI-powered pre-trade Dealer Selection Scores with novel liquidity aggregation functionality to solve genuine client pain points and further electronify the segment of the market that is still being traded bilaterally,” said Jim Kwiatkowski, chief executive of LTX.
“This is the most recent example of LTX using emerging technologies to drive efficiency in the corporate bond market to the benefit of dealers and the buy-side.”
Dealer Selection Scores gives buy-side clients the ability to optimise the number of dealers that a client sends each RFQ, based on dealers’ real-time and historical LTX Liquidity Cloud input as well as pricing and platform behaviour. Dealers also benefit from Dealer Selection Scores, as it allows them to enhance direct networking to clients.
Once an RFQ+ is sent to an optimal group of dealers, various dealer responders are able to bid or offer for the size they each want. Technology then aggregates the bids/offers, giving buy-side clients the ability to fulfil the block in one session with multiple dealers.
“Executing size in today’s credit markets is often challenging,” said Steve Chylinski, head of FI trading at Eagle Asset Management.
“The approach that LTX is taking to build on the familiar RFQ protocol with RFQ+, the innovative aggregation capabilities and AI powered Dealer Selection Scores can potentially be a game changer for the buy-side and dealers to execute larger trades electronically.”