Trade analytics provider Overbond has released a margin optimisation tool that uses AI technology for sell-side fixed income desks to increase their amount of request for quotes (RFQ) responses.
The margin optimisation add-on is integrated with Overbond’s suite of AI-powered fixed income analytics, and aims to help traders optimise their hit ratio and triple the number of RFQs they can profitably respond to with full or partial automation.
It captures margin optimisation data and trains the model to the risk tolerance and execution style of the trading desks, categorising RFQs processed in terms of those that are accepted, rejected, covered and traded away. With this, the tool reduces distance-to-cover at point of execution of new RFQs based on best price according Overbond’s pricing model.
“It is difficult for sell-side fixed income desks to be profitable in this environment, so trade automation has become the industry standard. Traders are realising that they can gain a competitive edge by augmenting their trading with AI,” said Vuk Magdelinic, CEO of Overbond.
“Of course, achieving an optimal hit ratio is a key part of maximizing P&L. With Overbond’s AI-driven margin optimisation add-on, sell-side desks can respond to up to three times the volume of RFQs without incurring negative margin on those trades.”
Earlier this month, Overbond teamed up with trading communications specialist IPC to introduce technology that allows voice transaction data to be translated into algorithms for executing automated trades in fixed income.