ION Markets has created a new fixed income execution management system (EMS) for both buy and sell-side traders, The TRADE can reveal. Designed to ease challenges around selecting counterparties and sourcing liquidity, the new platform aims to digitise the entire dealer to customer (D2C) trading process.
“In recent years we’ve seen an increase in need of integrated automated single solution tools to facilitate market making. We were seeing a lot of fragmentation of desktop applications and a lot of inefficiencies, so we thought, let’s do something that facilitates, automates, and makes the life of traders easier,” said Tommaso Di Grazia, head of fixed income product development at ION Markets, speaking to The TRADE.
“Aside from Covid, and the challenges of moving to a hybrid working environment, what we’ve seen recently is a lot of changes in both market structure across different asset classes, and the way people are trading within it. For example, we’re seeing a trend of reducing trade sizes and increasing frequency due to the electronification of various asset classes.
“We’re also seeing what we might call ‘equification’ – a trend of gradual alignment of fixed income towards what’s happened in the equities market. So we wanted to plug in an EMS that allowed traders to essentially slice and dice – collect orders, execute orders, reroute, request. It’s been available for a long time in the equity space but we increasingly saw the need for this within fixed income.”
Trading desks are under increasing pressure to deliver best execution across different bond asset classes, but data can be hard to come by and the fixed income space is very different from equities when it comes to ease of information. The new platform aims to ensure best execution for the buy-side among various D2C markets and retail venues, as well as offering buy-side capabilities to sell-side traders through direct execution as well as at-trade and post-trade hedging. It also provides a full audit trail of all steps in the execution process, with automatically generated client reports.
“Integrated within the ION market-making solution, the platform is modular, so you can plug things into it in a quick and sleek way. We think of it like Lego, you can add all the modules together easily and we take care of the integration so that clients don’t need to worry about it,” said Di Grazia. “It’s an entirely new product and that enables intelligent auto-execution capabilities for executing brokers while extending access to liquidity for sell-side traders.”
In 2018 ION bought software specialist Fidessa in a £1.5 billion takeover, beating out Temenos to the punch. At the time, Fidessa had an award-winning fixed income trading platform, which some market players have suggested may have been a factor behind the acquisition. Given the currently sparse marketplace for fixed income EMS and OMS, the latest offering is likely to be received with interest.