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Bond Trading Desks Get a Hand From Algorithmic, Equity Veterans – Bloomberg  

mad-scientistA growing group of executives with algorithmic or equity backgrounds tasked with adapting banks’ fixed-income trading to a tougher business environment. FULL ARTICLE 
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  • Merlin
    MerlinFebruary 17, 2016"Cougar, are your last two sentences serious or tongue in cheek?…"
  • CharlieFebruary 16, 2016""A lot of conversations will be taking place that never would have happened before"...... Such as "what to you mean it may not trade at all?", "what time does the market close", "there is no NBBO?" or "explain duration again". Of course I exaggerate and there are some best practices that can be transferred between the two e.g. FIX connectivity, recovery of messages etc. Algorithm technology maybe less useful than initially thought possible given the available data and…"
  • Goose
    GooseFebruary 12, 2016"Groundhog Day! “That way is ridiculous and inefficient, do it THIS way!” The Ferrari is an awesome car, and if you already have one that works, let’s drive it in this market, cost efficiency and scale!! Nice idea, but in a world with minimal infrastructure, roads, or rules, that car can’t get anywhere, and the current modes of transportation are built and work for that world. Sure there are tools from those markets that can help. However, it’s hard to not let your ego…"
  • Cougar
    CougarFebruary 12, 2016"E-trading fixed income is a great idea. It would greatly ease our workflow and simplify the audit trail for compliance best execution. The situation today in cash credit is nowhere near where we want to be and its current implementation arguably is actively damaging the functioning of the market. Currently quotes on many of the electronic screens in sizes of 100k or 250k are really valuations than bids & offers. Attempting to sell 5MM or more, a standard block in…"

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7 Comments on "Bond Trading Desks Get a Hand From Algorithmic, Equity Veterans – Bloomberg  "

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Jester
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Don’t know if anyone has been paying attention, but the track record of FX and equity leadership in non-TSY fixed income markets has been nothing short of laughable. The assumption is that since the MD de jour from the (insert FX or equities) desk has successfully implemented electronic trading strategies in their respective asset class, they must have the experience needed for fixed income. It is under this false premise that these algo-heroes are handed the reigns of fixed income market making businesses. And let me tell you, they grab those reigns with confidence! Ignoring the troglodytes of the fixed… Read more »
Slider
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Thanks Jester. Wonder what the architect of the Citadel system is doing these days???!!! I have had the pleasure of “helping” equity/fx guys bring their vision to credit multiple times and it never ceases to amaze me how little they understand credit and how uninterested they are to actually learn credit. These guys/gals (are there any gals?) are a bunch of prima donna’s that wouldn’t know a corporate bond if it bit them in the ass. Good luck to these new guys. The only way any of them succeed is if they never built anything in their prior jobs but… Read more »
Iceman
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Merlin, Jester, much like the equity/fx algo legends I don’t think I can add anything here. You have nailed it.

What is notable across the street is every business on buy and sell is seeing a shift towards equity management taking over fixed income business. I look forward to seeing how they deal with the entirely esoteric products and what they do when the market in 120,000 securities goes one way for weeks at a time. ‘Does not compute’ is not going to be a great answer I would humbly suggest.

Cougar
Guest
E-trading fixed income is a great idea. It would greatly ease our workflow and simplify the audit trail for compliance best execution. The situation today in cash credit is nowhere near where we want to be and its current implementation arguably is actively damaging the functioning of the market. Currently quotes on many of the electronic screens in sizes of 100k or 250k are really valuations than bids & offers. Attempting to sell 5MM or more, a standard block in recent years causes a significant discount to be applied to where the real bid is. When the buyside and banks… Read more »
Slider
Guest

Cougar, are your last two sentences serious or tongue in cheek?

Goose
Guest
Groundhog Day! “That way is ridiculous and inefficient, do it THIS way!” The Ferrari is an awesome car, and if you already have one that works, let’s drive it in this market, cost efficiency and scale!! Nice idea, but in a world with minimal infrastructure, roads, or rules, that car can’t get anywhere, and the current modes of transportation are built and work for that world. Sure there are tools from those markets that can help. However, it’s hard to not let your ego and market structure worldview lens cloud the concept of incremental improvement. Let’s build some roads before… Read more »
Charlie
Guest
“A lot of conversations will be taking place that never would have happened before”…… Such as “what to you mean it may not trade at all?”, “what time does the market close”, “there is no NBBO?” or “explain duration again”. Of course I exaggerate and there are some best practices that can be transferred between the two e.g. FIX connectivity, recovery of messages etc. Algorithm technology maybe less useful than initially thought possible given the available data and quantity of trades per day. The technology transfer from Equities to FX has been somewhat successful especially in terms of algos so… Read more »
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