EMS adoption rising among fixed income traders as regulatory burdens intensify, claims report

Access to liquidity from multiple sources in a single blotter is the main benefit of an execution management system (EMS) in electronic fixed income trading, according to survey.

The adoption of EMS for fixed income trading is expected to rise, spurred by time constraints and increased regulatory burdens, according to a report from Coalition Greenwich and TS Imagine.

The findings are aligned with The TRADE’s own EMS survey findings which have seen increasing numbers of responses from fixed income traders in recent years.

The survey from Coalition Greenwich, which included responses from more than 40 senior fixed-income trading professionals across US asset management firms, hedge funds and insurance companies, asserts that the rise of EMS has “moved front and centre” in fixed income markets.

“In recent years, swaths of new data are coercing traders to consider new ways to engage the market and seek liquidity,” said the report.

Overall, responses demonstrate that 100% of those surveyed believe fixed-income EMSs do give them an edge – specifically saves time and eases regulatory burdens – while trading.

Rob Flatley, chief executive of TS Imagine explained that the company is currently seeing an “exponential” increase in demand for its fixed income EMS and linked this to traders seeking a more streamlined workflow. He added: “This report demonstrates that we are in the middle of a seismic shift towards electronic fixed income trading right now.”

However, responses showed that currently those surveyed prefer to utilise chats as opposed to the processes embedded within an EMS when getting trades done. Around a third of those surveyed highlighted chat, while just 27% highlighted trading with technology as their preference.

Generally, the market is demonstrably seeking to increasingly augment, as opposed to replace, the role of traders, indicated the survey. When looking at the potential top motivators for adopting an EMS, 63% of those asked highlighted the access to liquidity from multiple sources in a single blotter as one of the top motivators. This was closely followed by increased automation of the trading workflow (61%).

Spencer Lee, chief markets officer and head of fixed income at TS Imagine, said: “The fixed income market has now truly woken up to the huge benefits of electronification and this report is loud and clear: the train is leaving the station.”

The TRADE’s own annual EMS survey is currently running with participants able to respond up until 4 August.