When it comes to trading tech stacks, conversations across the industry have turned to the fixed income sphere ramping up in line with innovations in other asset classes, namely when it comes to Execution Management Systems (EMSs).
Speaking at the Fixed Income Leaders Summit, Kate Finlayson, global head of FICC market structure and liquidity strategy, JP Morgan, shared her perspective on EMS adoption across the fixed income sphere, highlighting that it is something the firm “has been tracking and engaged with for quite some time”.
She added: “You want to be able to interact with your clients and provide liquidity to your clients in the most efficient way possible. The evolution of the EMS functionality in equities is an easy one in that it has been around for longer – you had some providers that were an equities EMS provider and thought, ‘okay, how do we adjust for whether it’s FX or how do we look at fixed income?’ But fixed income, as we know, is a different beast altogether.”
Delving further, Finlayson highlighted said that the industry has seen progress in terms of the increased adoption and build out of EMSs across the space, but that it “feels a little slow”.
Digging into the reasons, she highlighted noted that in some instances there is not real readiness or a prioritisation, and also, commonly, the complexities of each business play a part.
“Where we do see it progressing perhaps more is in the US, where some of that functionality has been more advanced. We also see some elements on the horizon which might make 2027 quite an interesting year in terms of further adoption – for example, because of the fact that it’s now possible to do a portfolio trade via an EMS.
“When we look at it from our perspective, on the liquidity provider side, this adds extra functionality, it lends more value, and enhances that engagement – real advances propel a little bit further momentum.”
Automation a reflection of the human
Elsewhere, the speakers debated the importance of the fixed income sphere retaining what makes it great – the relationships behind the movements.
Affirming the importance of keeping the human in the loop, Inés de Trémiolles, global head of trading, BNP Paribas Asset Management, stated that “automation is just a reflection of where human things are being done”.
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She added: “The first step to automate is to digitalise, if you have a market that is not digitalised, you cannot automate. From the point of view of BNPP AM, we are a relatively European organisation, and our experience has been that markets in Europe are more digitalised than in the US.”
The caveat of BNP Paribas’ European lens was reiterated, before de Trémiolles explained that the firm’s tactic is to deploy automation in Europe before assessing the regions and where it can be most beneficial. This slow but steady approach is set to be the trend across a fixed income ecosystem ready to embrace change – but retain what makes the asset class unique.
She explained: “We are always looking at how much time and effort we spent to automate and how many orders we will have eligible for automation, there is no point in saying, ‘I’ve done all this work’ and then you have no orders that are able to automate them. Then, you’ve wasted your time.”