For what it’s worth, big banks haven’t been willing to let the market they’ve long dominated slip away without a fight. Many of the biggest bond dealers have pushed for direct connectivity with clients, allowing them to circumvent the electronic marketplaces and block out other electronic market-makers all together. 

I would like to see more of a push towards the cleansing of that (corporate bond) data. And that could be by ranking the prices based on those that work, or something similar to Bloomberg’s Magenta Line pricing. Vendors could work better with the banks at tagging runs, levels or prices that are more likely to be tradable than not tradable. That’s where we spend a lot of time worrying.

In 2000, TowerGroup, a Massachusetts market research firm, estimates that currently 10% of all transactions in the fixed income market are executed electronically, compared to approximately 25% in the equity market TowerGroup also estimates that the proportion of fixed income securities traded electronically will rise to almost 60% by 2004. 

Bond trading is ripe with AI capabilities, making way for accuracy. Bond traders looking to adopt AI platforms must first recruit, train, and retain the appropriate human talent to handle the transition and deployment of this new technology. 

El-Erian and others worry that an artificial environment of near-free money is masking serious underlying ailments and may be storing up problems for a future reckoning. This era of perpetually cheap money has kept alive some debt-ridden “zombie” companies that would have failed if rates were at traditional levels; widened the wealth gap between rich and poor; and distorted financial decisions, he said.

A group of European and UK banks is considering building its own fixed-income trading software, in a move that could allow members to cut ties with the market’s biggest vendor, Ion. The project, dubbed Cohesion, is in its early days but pitches were invited from potential builders of the technology this summer. The banks are now understood to be deciding whether to commit further time and money to the work.

Trumid Financial, the New-York based financial technology company and electronic trading platform for corporate bonds, today announced a strategic partnership with Citigroup to explore innovative solutions to provide liquidity and connectivity to fixed income institutional clients. Trumid’s trading platform aims to increase the volume of corporate bonds traded electronically.

After years of tiptoeing around systematic styles in debt markets, investors are starting to believe in the promise — ushering in a new world of advanced statistics and robot-learning. About 70% of institutional and 78% of wholesale investors reckon the strategy of dissecting securities by their factors, like value and momentum, are applicable to fixed income, according to a study by Invesco Ltd.

The fixed income market is witnessing an explosion of market data, which presents both benefits and challenges. With this plethora of available information, traders are faced with the task of forming a truly holistic view of available opportunities, and must do so with speed and accuracy.

“There is a push now for direct connectivity between myself and the banks, and I think the fallout from that will be, I don’t need to use one of the big three platforms to trade, if I can have five or six direct feeds.”