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Technology Spending Key to Fixed Income Market Share Growth – Traders 

Full Article: Traders Magazine

The top six U.S. government bond dealers have an aggregate annual technology budget of $26 billion. That astounding figure illustrates the extent to which technology prowess has become the key determinant of success or failure for banks competing in capital markets, reports Greenwich.

Comments
  • Slider
    SliderOctober 14, 2017"'Technology spend' would seem to cover a lot of things. If we look at from the FNL perspective on how FI technology is developing I think we can say that while progress has been made, most firms are still in shambles. It is different to build something that does something than to build something that people will use to do that something. The capital markets issues attempting to be addressed today are broad and varied, leading to huge internal spends and a plethora of…"
  • Cougar
    CougarOctober 14, 2017"That there is still a problem in fixed income that other asset classes overcame years or decades ago despite all the other asset class experts being parachuted in, as well as the significant spend, point to persisting problems - lack of information to deal (AKA 'price') decisively with confidence. These two issues are the inhibitors to market structure change: 1) the need to concentrate liquidity (rather than pretend to offer all-day liquidity) to allow traders to und…"
  • Jester
    JesterOctober 13, 2017"This article is an early Christmas gift to internal IT teams at banks, but it left me with a few questions. This "$26 billion" in proposed annual tech spending across the top six US government bond dealers, is that for just government bond trading or all products? I can't believe it is the former because there is just no way that government bond desks can sustain an average annual tech spend of ~$4 billion. Treasury market making never made that type of money and toda…"
  • Wolfman
    WolfmanOctober 13, 2017"$26,000,000,000.00 is a very big number, but the powers that be understand that this is a necessary spend. What this does, however, is identify a market for technology providers to attack. Talking on new IT development projects is a lengthy and expensive task and I think we'll see more and more third party solutions stepping into the fray. What's needed is a unique combination of technology knowledge and market knowledge which opens the door for start-ups, consultants…"

Bloomberg is fighting back against Symphony – Business Insider

Full Article: Business Insider

Bloomberg, the financial data giant, is offering customers of its signature terminal a way to use its chat function as a stand-alone feature for just $10 a month. The offering, first reported by the Financial Times, undercuts Symphony, a chat and data startup once touted as a “Bloomberg killer” because of its low-cost offering and backing from Wall Street’s biggest firms.

Comments
  • Iceman
    IcemanOctober 9, 2017"While I echo my learned colleagues views I would also add that if you look at Symphony's 'traction' in the financial markets it is not exactly far reaching.... how many companies are connected externally to chat with their clients? A stat I would love to see compared to BBG given the tag line and the amount of money and time invested in the system from the financial markets. On the plus side I do see the market changing and as Mustang pointed out a combination of Symp…"
  • Goose
    GooseOctober 6, 2017"Between overall cost cutting pressure and Symphony deals, the dealers have likely gotten rid of every single Bloomberg terminal that is not deemed essential. Maybe Bloomberg is betting on that fact, and sees this as a relatively cheap call to see if this offering can blunt Symphony by fill the needs of those not on it yet (am guessing there are a lot of firms of all shapes and sizes that aren’t), and connect back with users who didn’t deem the 22k bill essential. Now…"
  • Viper
    ViperOctober 5, 2017"I'm struggling to see the reason for this product’s existence. This does not help sales who only use IB to chat with clients. The IB-only Bloomberg product will only allow you to chat with internal employees. I hated having to fork over $2,000 per person for a Terminal, but there is no real option because their clients are all traders who need Terminals for other reasons. Switching to Symphony is a big effort for an organization and it has already been done by most of…"
  • Mustang
    MustangOctober 5, 2017"This is interesting on many fronts. Where to start? First, BBG is offering chat only for customers that have one BBG terminal at a $22k cost and for internal use only. This is competitively worse than Symphony, which has no restrictions and is both internal and external. I don’t see how a $10/month cost decrease offsets a competitively worse offering than Symphony. Price isn’t the issue and this doesn’t stave off Symphony at all. Instead, it gives Symphony a more valu…"

Most Bond Traders Don’t Like Their Jobs – Greenwich Associates 

Full Article: Greenwich Associates

Most respondents who were negative about the sell-side trading role were positive about other parts of financial services. Moving from the sell side to the buy side was mentioned more than once, as there is more opportunity for growth with less stringent regulations and a debatably steadier stream of recurring revenue based on assets rather than transactions.

Comments
  • Slider
    SliderSeptember 29, 2017"Jester, come on. Bond traders just might be in the second most overpaid job in the world, right behind bond salespeople. If they aren't happy, sure, go look for another career but the vast majority don't have a skill set easily transferable into the new world. Just look at what happens to older bond traders and salespeople that either didn't make enough or spent too much when they were in the same position, scrounging around trying to hang on any way they can at whate…"
  • Charlie
    CharlieSeptember 29, 2017"Not surprising given that traders think tactically, not strategically. Their optimization period is now to next bonus, or, at best, next promotion. If they were thinking about their careers over the next 10 years+, they would realize that we are probably at peak regulation. Someone thinking of joining compliance now is buying a top. Someone thinking of getting into trading is buying closer to the bottom. The upside certainly appears lower today, but I think the prevai…"
  • Jester
    JesterSeptember 29, 2017"Is this article really news? Bond trading on the sell-side has become an exercise in dodging bullets for some time now. If you aren’t blowing yourself up standing in front of toxic flow, you are constantly being told to reduce the size of your book. That combined with the fact that 90% of the days now feel like "Summer Fridays" due to lack of volatility, makes for a pretty bad seat. Finally, another aspect not mentioned in the article is the growing practice of paying…"

Robots Are No Match for the Human Bond Trader – Bloomberg Gadfly

Full Article: Bloomberg Gadfly

Bond markets, for example, have been relatively resistant to the technology onslaught, even as electronic platforms eat up market share at the less sophisticated end of things. Unlike stocks, which are fairly homogenized and easy to trade, bonds come in many different shapes and sizes.

Comments
  • Wolfman
    WolfmanSeptember 22, 2017"Humans who understand how to work with robots will outperform humans who don't. A robot told me that.…"

Goldman Sachs Has a Plan For Its Misfiring Bond Business – Business Insider 

Full Article: Business Insider

Schwartz provided some rarely seen detail on sales performance by client type. Sales credits are down heavily for hedge funds. Given hedge funds make up almost a quarter of Goldman Sachs’ sales credits, that’s a problem for the bank. 

Comments
  • Goose
    GooseSeptember 15, 2017"GS has always given heavy weight to the derivatives side of the FICC business. Today, many of its derivative stars hold key seats dictating the direction of the FICC businesses. I wonder if GS has the internal DNA to increase its penetration in the asset manager/corporate space Interestingly, there was an FT article a few weeks ago talking about the new GS algo in credit. Making several thousand automated odd lot markets has yet to prove a winning strategy to institut…"

Alternative Theory on Corporate Bond Liquidity – ViableMkts (Chris White)

Full Article: ViableMkts

Regardless of your position, settling this debate is critical because the US corporate bond market is the most systemically important market in the financial world. If there is a liquidity problem, it is vital that we identify the causes and begin to implement solutions.

Comments
  • Charlie
    CharlieSeptember 10, 2017"Definitely an interesting discussion and compelling set of facts. As the article states, the concept of liquidity is a difficult one to pin down precisely. But there are some clearly wrong ways to look at it, such as based solely on realized trading activity, another good point made in the report. Opportunities to trade is also a tough one, since it's a bit of a joint test of liquidity and REASONS to want to trade (which requires some volatility, or some other catalys…"
  • Wolfman
    WolfmanSeptember 8, 2017"As usual, another Viable Markets insightful article. I think the lack of liquidity in the corporate bond market is a function of low rates, pressure on capital at risk, the introduction of ETFs and transparency impacting market making opportunities. The fixed income markets are, in general, less prone to reacting severely to market news and geo-political shocks. There have been any number of news items that should have had this markets reeling, and for the most part,…"

Pre-Trade Transparency Targeted in Corporate Bond Markets – Business Times 

Full Article: Business Times

Global securities regulator umbrella body IOSCO has recommended that its members seek more information on corporate bond trading, particularly on the specifics of the market before a trade is made, and how it is subsequently reported

Comments
  • Mustang
    MustangAugust 18, 2017"Not a lot of information in this article, however there is a big distinction between collection and dissemination. The NASD collects a lot more information than disseminated. In many respects, I wish the hard data collected was actually disseminated, such as from ATS platforms. That said, what market widely disseminates intentions, as opposed to explicit transaction levels? Seems like an easy way to game the market. Anytime you wanted to buy bonds, submit a sell IoI.…"
  • Wolfman
    WolfmanAugust 18, 2017"Right on Cougar! I love being part of the Friday Newsletter because more often than not, we not only have the 10,000 hours team taking two sides of an argument, but also have two articles in the newsletter taking two sides. Yes, yes, yes, every academic paper points to greater pre-market transparency, but in practice, the results are often counter to the objective. Case in point is the article on Lazy Traders. By the way, there must be some copyright issue with that p…"
  • Cougar
    CougarAugust 18, 2017"Disclosing individual buy-sell side cares shared with a broker is insidious. IOSCO and the national regulators need to reflect on their objectives: is it to ensure every participant is treated the same irrespective of performance or MO, or have a functioning, liquid, deep, bond market to minimize funding costs for public and corporate entities and ensure minimal state aid in a crisis? If every market participant is treated the same way then that detracts from the inve…"

How to Get a Competitive Advantage in Fixed Income – FixtHub

Full Article: FixTHub

Many fixed income firms are gaining a massive competitive advantage by structuring Bloomberg messages to find more trades and to find them before competitors. 

Comments
  • Mustang
    MustangAugust 11, 2017"Unstructured BBG messages are an incredibly inefficient way to communicate axes. The rise of Neptune underscores that. However, BBG does a disservice to itself to silo off its message data from other market axes via messages and IMGR. At the same time as they create a barrier, parsing is an extremely cheap and easy way to circumvent that barrier. Unstructured messages and using parsing to structure them outside of IMGR yields some interesting tidbits. This data has be…"

A Morgan Stanley Trader is Gone and Wall Street Rivals Take Note – Bloomberg

Full Article: Bloomberg

His undoing at the bank began when Hutchin Hill, a hedge fund with about $3 billion in assets, noticed someone carried out a trade on a security that it also owned, sparking a decline in the price.

Comments
  • Goose
    GooseAugust 5, 2017"wonder what would happen if MS called Hutchin Hill and asked them if they were involved in a trade. If HH thought the value was wrong, progressive options are out there to put your money where your mouth is. Become a buy side liquidity provider by sticking a bid where you believe value is in "all to all" or matching systems. Wonder what the results would be.…"
  • Jester
    JesterAugust 4, 2017"I found this article a little hard to follow. From what I can gather, here are the facts. 1) A HF got upset because someone traded a bond that they are long 2) After investigating, it looked like a MS trader was involved 3) The MS trader initially denied being involved 4) The HF complained to the trader’s boss 5) MS then admitted to doing the trade and then fired the trader If the above is true, why isn’t this article focused on the real question? Why is Hutchin Hill…"
  • Wolfman
    WolfmanAugust 4, 2017"The impact of recent regulatory changes have created a deeper need for the sell side to cater to the buy side. Lying is unacceptable for BOTH the buy side and sell side. I'm glad to know that the buy side is sinless.…"