Does the buy-side hold the key to bond liquidity?

Fixed income market experts will gather in London this week to discuss key challenges ahead of MiFID II.

Bond liquidity has long-been a topic of discussion among fixed income market participants. Regulators worldwide have rejected claims, up until quite recently, that bond liquidity has deteriorated since the financial crisis in 2008.

With MiFID II looming, rules for trading non-equity instruments are largely tipped to negatively impact fixed income markets. 

Studies have shown the buy-side is unsure on the effects the regulation will have on liquidity, the use of liquidity providers, and the unintended consequences of greater pre-trade transparency. 

However, the key to overcoming these challenges could be a greater role for the buy-side.

A survey by Worldwide Business Research last year found 68% of fixed income market participants believe the buy-side now has more control of bond liquidity, quite the role-reversal from when the majority of liquidity was held by the sell-side.

The results suggested the challenge for fixed income market participants has now shifted from sourcing liquidity to moving the liquidity from buy-side books.

On top of this, the industry has witnessed a boom in fixed income platforms meaning the buy-side is also tasked with working through countless initiatives to establish fruitful relationships with liquidity providers.

Through into the mix transaction reporting requirements, the hunt for best execution and technological choices yet to be made, the buy-side have a daunting task ahead. 

Industry experts will gather in London this week with The TRADE and ICE Data Services to discuss these challenges ahead of MiFID II.

Panels will discuss the main hurdles for firms demonstrating best execution for non-equity products, how the buy-side can prepare for transaction reporting requirements and what technological choices will need to be made.

Speakers will include Ashlin Kohler, director for global rates eCommerce FICC at Citi, Cathy Gibson, head of fixed income trading for the UK at Deutsche Asset Management, Fazila Guahar, senior associate at the Financial Conduct Authority and Jonathan Gray, head of fixed income EMEA at Liquidnet.