A new credit execution system established by the former global head of trading at Nordea Asset Management has expanded its partners ahead of launch with three liquidity providers and connectivity to several key data sources.
Wave Labs, founded by Miles Kumaresan in 2018, has made various partnerships as it prepares to begin a three-month phase of controlled trading with one or two asset management clients before the platform goes live in September.
Known as eLiSA (Electronic Liquidity Seeking Application), the execution system is now certified to send dealer request for quotes (RFQs) via APIs with Bloomberg and UBS BondPort. Connectivity to MTS, now owned by Euronext, has also been completed with certification pending.
Wave Labs is also working on a connectivity to the ICE Bonds ecosystem, which includes the BondPoint and TMC Bonds platforms, which exchange operator ICE acquired several years ago. The start-up is also hoping to connect with Tradeweb and other sell-side institutions to provide clients with tradeable streaming prices.
Speaking to The TRADE, Kumaresan said partnerships with venues can be a major hurdle for new entrants as start-up platforms are expected to have clients before connecting to venues, but in most cases need clients before gaining access.
“We have been very fortunate to have so many buy-side backing eLiSA,” he added. “eLiSA is in fact a product that is shaped by these backers. Every single one of them have contributed to taking eLiSA to where it is now.
“An eLiSA demo is typically a mini-brainstorming session. Shortly after a recent demo, I received an email detailing request for new functionality. Within 48 hours, we had implemented a first cut of this feature and got back to the trader who had asked for it. This is what it is all about for us, to create a technology that the buy-side has actually asked for.”
Kumaresan added that as eLiSA specialises in credit trading, Wave Labs will connect to major execution systems that cover all areas of fixed income trading. He confirmed that work has already started on connecting the platform with Bloomberg TSOX and other EMSs on behalf of clients.
Highlighting the importance of system interoperability as an emerging trend between established players and specialist start-ups entering the space, Wave Labs also teamed up with IHS Markit and integrated its cross-asset order management and portfolio modelling system (PMS) thinkFolio.
“Enhancing trader user experience and delivering capabilities that facilitate collaboration with portfolio management are key focus domains for thinkFolio,” said Brett Schechterman, global head of thinkFolio at IHS Markit. “Wave Labs have developed a highly complementary workbench and market intelligence hub in eLiSA that offers traders a unique operating lens and streamlined workflow.”
Elsewhere, Wave Labs has also made various connections to data sources with eLiSA providing an open data portal to traders and portfolio managers which can channel structured and unstructured data.
The dataset includes continuous estimated prices, IOIs (indications of interest), axes, TRACE data and credit research. Data partnerships have also been formed with Neptune, Bloomberg and upcoming data pooling network Glimpse Markets.
“Connectivity to buy-side clients’ core workflow tools, such as order or execution management system (OMS/EMS), is integral to Neptune’s strategy,” Byron Cooper-Fogarty, acting CEO of Neptune, commented on the firm’s partnership with Wave Labs. “As such we continue to work with partners such as Wave Labs to provide the highest quality fixed income data to mutual clients.”
More recently, Wave Labs expanded its partnership with IHS Markit forged a data agreement with thinkFolio to source fixed income data and price discovery. New York-based corporate bond analytics provider BondCliQ will also provide the eLiSA platform with real-time quotes from more than 45 dealers covering 15,000 CUSIPS for 120,000 price points each day.
“We look forward to building on the strong partnership between Wave Labs’ eLiSA system and thinkFolio by collaborating further across bond pricing and reference data to deliver additional insights around liquidity and price discovery,” Nathan Kirk, executive director of fixed income strategy for EMEA at IHS Markit, commented.
As liquidity continues to migrate from traditional liquidity providers to trading venues and all-to-all trading in fixed income continues to rise, Kumaresan added that both makers and takers of liquidity need better systems for efficient trading. The buy-side is also increasingly taking on the role of price maker, which eLiSA aims to cater for by allowing asset managers to make prices in bonds.
“Growth in all-to-all trading will give rise to formation of more complex fixed income market micro-structure for the first time, a relatively new concept in fixed income,” Kumaresan said. “Liquidity will still remain fragmented, however, it will become more uniformly divided among the different venues. This trend will pose new challenges to the buy side trading desk – how do you harness this form of larger pools of fragmentation?
“The buy side has to respond to these changes to stay competitive. The question is no longer whether to invest in new trading technology, but more which technologies would offer flexibility to adapt and stay ahead. Now more than ever before, this responsibility falls on the shoulders of heads of trading to have a technology vision for their desk and lead this technology transformation as thought leaders.”