Towards a Fully Automated Stock Exchange (Part 1) – Fischer Black (1971)

Author: ChrisWhite \ July 7, 2017 \ 1 Comment

FNL Exclusive: This brilliant article by Fischer Black predicts how technology and electronic trading will change equity market structure.

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WolfmanJuly 7, 2017"So for the bond geeks who read FN, the obvious parallel is specialist is to equities as dealer is to bonds. I don't think it's that simple or that direct. Small average trade size with a large number of participants are ingredients for a continuous market. BTW, I like the idea of participating orders to help specialists! We don't have that today, but we do have market orders which, in a continuous market, are the equivalent to what Dr. Black proposed. The automation o…"

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Wolfman

5 years ago

So for the bond geeks who read FN, the obvious parallel is specialist is to equities as dealer is to bonds. I don’t think it’s that simple or that direct. Small average trade size with a large number of participants are ingredients for a continuous market. BTW, I like the idea of participating orders to help specialists! We don’t have that today, but we do have market orders which, in a continuous market, are the equivalent to what Dr. Black proposed. The automation of the fixed income market will come, but it will not parallel equities. Those who will drive… Read more »

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MarketAxess defends its corporate bond trading status

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MarketAxess defends its corporate bond trading status

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Towards a Fully Automated Stock Exchange (Part 1) – Fischer Black (1971)

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Lutnick Offers $20,000 Per Month to Trade on New Treasury Platform – FT

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Lutnick Offers $20,000 Per Month to Trade on New Treasury Platform – FT

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Fixed Income Trading Models: Convergence Ahead? – Markets Media

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A $500 Billion Dollar Investor Developed ‘Cutting Edge’ Technology, and Now it is Sharing It – Business Insider

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A $500 Billion Dollar Investor Developed ‘Cutting Edge’ Technology, and Now it is Sharing It – Business Insider

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A $500 Billion Dollar Investor Developed ‘Cutting Edge’ Technology, and Now it is Sharing It – Business Insider

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A $500 Billion Dollar Investor Developed ‘Cutting Edge’ Technology, and Now it is Sharing It – Business Insider

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A $500 Billion Dollar Investor Developed ‘Cutting Edge’ Technology, and Now it is Sharing It – Business Insider

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ChrisWhiteMay 19, 2017"As the moderator of this forum it is my job to review all comments to ensure that there are no personal attacks. Unfortunately, I did not identify a statement that was made of a personal nature in a previous comment. That comment ha…"
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A $500 Billion Dollar Investor Developed ‘Cutting Edge’ Technology, and Now it is Sharing It – Business Insider

IcemanMay 19, 2017"Congratulations to Alliance Bernstein for creating and then monetizing their platform. In a world were OMS are clunky and incumbent providers are doing little if anything to further their clients needs and focusing on their own reve…"
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A $500 Billion Dollar Investor Developed ‘Cutting Edge’ Technology, and Now it is Sharing It – Business Insider

MustangMay 19, 2017""I want to like this move, I really do, but I can’t get there."-Merlin Same here. Some comments and random musings: 1. Algomi's strength is and has not been in building good products. Given this, buying an existing product seems to…"
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A $500 Billion Dollar Investor Developed ‘Cutting Edge’ Technology, and Now it is Sharing It – Business Insider

GooseMay 19, 2017"Well, I was going to write something, but given the above I would be promptly sued for plagiarism. Merlin is really dealing today, so I say, "what he said". I just do not get this choice of deal partner at all on any level, given wh…"
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Hedge Funds Are Facing a US Criminal Probe Over Bond Valuations – Bloomberg

CharlieMay 15, 2017"There are two separate (hard) problems here: bad apples and bad prices. On bad apples: As several others have pointed out, if there's a way to tip the scale, someone somewhere will do it. So make it impossible to tip the scale. Not…"
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Hedge Funds Are Facing a US Criminal Probe Over Bond Valuations – Bloomberg

GooseMay 12, 2017"All good points here. The worst thing for the markets will be if the press, incumbents, and regulators see something like this and trot out that exhausted bromide, “MORE ELECTRONIC TRADING WILL SOLVE THIS AND CREATE THE TRANSPARENCY…"
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Hedge Funds Are Facing a US Criminal Probe Over Bond Valuations – Bloomberg

MustangMay 12, 2017"If there are incentives to shade something in someone's favor, they will always err on the side of shading it in their favor. If you add in difficulty in discerning "fair value" and limited negative consequences, then you've got a r…"
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Hedge Funds Are Facing a US Criminal Probe Over Bond Valuations – Bloomberg

JesterMay 12, 2017"Bond valuation corruption again? Yawn. Unfortunately, this article gives a false sense of just how wide the problem could be. This is not isolated to “illiquid securities” and this blatant inflation of valuations has not become more…"
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Hedge Funds Are Facing a US Criminal Probe Over Bond Valuations – Bloomberg

MerlinMay 12, 2017"This shouldn't be a surprise as there are many bad apples in the fixed income markets who would do anything asked to ingratiate themselves with people for a variety of benefits/opportunities. But I do not think there are more bad a…"
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Voice Communications Solidifying Role in Institutional Trading – Finance Magnates

CharlieMay 9, 2017"Nice and concise. 100% agree. The million dollar question, then, is: What value does voice provide to institutional investors that electronic doesn't yet, and how deep/wide is that moat? A couple thoughts: 1. Belief that sales-trade…"
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Voice Communications Solidifying Role in Institutional Trading – Finance Magnates

IcemanMay 8, 2017"Unsurprisingly I fully agree with the comments already made. Execution over chat and phone is still heavily utilized given the bilateral nature of the market and getting color still remains a key part to executing the trade. In EMEA…"
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Voice Communications Solidifying Role in Institutional Trading – Finance Magnates

GooseMay 5, 2017"“Even in U.S. equity markets, often viewed as one of the most electronic markets in the world, high-touch trading, or single-stock trades routed to a sales trader, still represents the largest execution channel.” Let the above quote…"
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Voice Communications Solidifying Role in Institutional Trading – Finance Magnates

WolfmanMay 5, 2017"I think I could have summarized the findings of a study related to the future of voice in trade execution as follows: as long as people receive a value to speaking with a person that is greater than any incremental cost associated w…"
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Voice Communications Solidifying Role in Institutional Trading – Finance Magnates

Voodoo3May 5, 2017"I think that rather than announcing anything new, what this article does is put a nail in the coffin of the Messiah view that electronic trading would be the answer to all evils. In reality there are segments and trades for electron…"
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A Review of The Economist Article on Corporate Bonds

WolfmanMay 1, 2017"There's a lot of anger in this week's discussion. C'mon guys, have a little patience with these guys - they've only been around since 1843! Yes, yes, they have a broad and diverse reader base and yes, yes, they need to keep things a…"
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A Review of The Economist Article on Corporate Bonds

JesterApril 28, 2017"A pet peeve of mine is articles that present as news and facts, but are really poorly researched commercials. Make no mistake my friends, this piece by The Economist IS a commercial and it reads like the “reporter” spoke to a single…"
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A Review of The Economist Article on Corporate Bonds

The DukeApril 28, 2017"If you want to see platforms' market share and performance over time look at the research on The DESK - https://www.fi-desk.com/focus-on-preferred-platforms-intensifies-competition/…"
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A Review of The Economist Article on Corporate Bonds

SundownApril 28, 2017"I read The Economist in college. I'm going to my reunion soon, and I must say I read this article as if The Economist had missed all that's happened in the subject matter or simply got it wrong, for the most part. Serious, completel…"
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A Review of The Economist Article on Corporate Bonds

MustangApril 27, 2017"Few comments: -Article Quote: "The traditional way of matching buyers and sellers has been for dealers to take on the risk. They name a price, buy bonds and hold them in their inventory until a buyer emerges. This explains why perso…"
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A Review of The Economist Article on Corporate Bonds

GooseApril 27, 2017"I was hoping a high quality publication like The Economist would dig a little deeper on theliquidity issues at hand, and the ability of the solutions to address the problem. Instead we got Groundhog Day. There usual liquidity soluti…"
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Bond Tape is a Matter of Time – Markets Media

GooseApril 21, 2017"You better believe that a public tape for treasuries is on the way. Once you start collecting data for “regulatory and compliance” purposes, you essentially create the demand for a public tape by investors and dealers. Does anyone w…"
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Bond Tape is a Matter of Time – Markets Media

JesterApril 21, 2017"What’s going to be the impact of post-trade reporting for US Treasuries? Well that depends on one crucial factor. Who will be managing the data? From the looks of it, the quasi-government-private institution known as FINRA will be i…"
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Bond Tape is a Matter of Time – Markets Media

WolfmanApril 21, 2017"I'm curious to see what sort of reaction the focus article gets this week. We're in an time indeed. Conventional wisdom is that all markets need transparency to operate efficiently, and the broad consensus among regulators and legis…"
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Tradeweb to Launch All-to-All Corporate Bond Trading in Europe – The Trade

IcemanApril 15, 2017"Agreed, always helpful when you have a board of the largest liquidity providers in the market who are the only firms who can vote to make this change to the platform. I think a better question is does this model help the market and…"
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Tradeweb to Launch All-to-All Corporate Bond Trading in Europe – The Trade

Tried and failed.April 14, 2017"The only surprise here is what took them so long? Driven by the need to catch MKTX, not be swayed by the fusion group and leverage the Dealerweb success, this should position TW for increased market share. It illustrates the ability…"
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Let’s Make a Deal(er): Buy-side Requirements for Price Making in Fixed Income Markets – ViableMkts

WolfmanApril 9, 2017"The Monty Hall picture was a great blast from the past but it's not exactly the "persona futura" of the market. Dealers aren't some game show host giving away money based on chance and greed. They may be more like the banker in Deal…"
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Let’s Make a Deal(er): Buy-side Requirements for Price Making in Fixed Income Markets – ViableMkts

Tried and failed.April 9, 2017"What would you rather do, look at the daily diet of billions of stale, bid side bids and offer side offers and no conviction RUNZ from dealers or get the chance to interact with genuine buyers and sellers? As a buy-side you don't ha…"
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Let’s Make a Deal(er): Buy-side Requirements for Price Making in Fixed Income Markets – ViableMkts

MustangApril 7, 2017""a buy-side execution trader must transition from a workflow model where they trade what they want, when they want to trade it, to a process that involves trading when opportunities present themselves." Yes!!!! The 5 asset managers…"
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Let’s Make a Deal(er): Buy-side Requirements for Price Making in Fixed Income Markets – ViableMkts

GooseApril 7, 2017"Thoughtful high level piece breaking down some of the decisions and work needed after the “I think I can add liquidity by making prices” statement. Numero uno....Does this make sense for your business? I think a lot of hands go down…"
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Let’s Make a Deal(er): Buy-side Requirements for Price Making in Fixed Income Markets – ViableMkts

JesterApril 7, 2017"Bravo on Monty Hall! Legend. I was pleasantly surprised at the measured tone of this article. The normal way buy-side price making in corporate bonds is discussed/reported is much more forceful, as if it is a foregone conclusion tha…"
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Bloomberg Terminal Users Declined in 2016 – The Desk

SliderMarch 31, 2017"I feel that Bloomberg has been asleep at the wheel and really offered much less on the data innovation front than I would expect. There is this entire data revolution going on and they haven't been innovative ENOUGH. Makes sense dat…"
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Bloomberg Terminal Users Declined in 2016 – The Desk

GooseMarch 31, 2017"Best of luck to those that are getting all hot and bothered over the terminal miss. It’s nice to own the delivery mechanism as well as the info delivered, stickiness has tremendous value….but judging from these numbers looks like Bl…"
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Bloomberg Terminal Users Declined in 2016 – The Desk

Tried and failed.March 31, 2017"Looks like business as usual at Bloomberg. So much for all the disruptive technology designed to slay it.…"
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Bloomberg Terminal Users Declined in 2016 – The Desk

JesterMarch 31, 2017"Saw a competitor to Bloomberg post on LinkedIn that this is Bloomberg’s “Blackberry Moment”. I couldn’t disagree more. According to this article, it looks like Bloomberg is expanding their domination in financial market data which i…"
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Bond Quotes and Performance Art – Bloomberg View

Tried and failed.March 25, 2017"This story graphically illustrates the present liquidity gradient in Fixed Income evidenced by at one end of the curve, large liquid, high grade bonds trading frequently in good volume, to the other end described in this case. Regul…"
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Bond Quotes and Performance Art – Bloomberg View

CougarMarch 24, 2017"This has got my back up in a BIG way. As both a former proprietary and market marker focusing on far more illiquid issues, at worse market times (height of the crisis), I am aghast at the way the client was treated. I would never dr…"
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Bond Quotes and Performance Art – Bloomberg View

Tried and failed.March 24, 2017"Too true. In spite of all the regulation and Fintech, Fixed Income remains the bad boy of financial markets and still very likely to be instrumental in the next crisis.…"
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Bond Quotes and Performance Art – Bloomberg View

MerlinMarch 24, 2017"Providing appropriate warnings to the retail investing public is a much better solution to the problem than trying to create liquidity where it does not exist. But my bet is the public would still buy anyway and still get shafted. W…"
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Bond Quotes and Performance Art – Bloomberg View

MustangMarch 24, 2017"Perhaps I mispoke: My commment was less so about whether this is beneficial for Joe Public or not, but more so about whether this could actually be fixed. Of course Joe Public should be protected. However, my point is that the same…"
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Bond Quotes and Performance Art – Bloomberg View

Tried and failed.March 24, 2017""somehow FI should be held to a different standard?" Yes, it absolutely should. This is Joe Publics' money we are talking about here that is supposedly managed by professional, regulated firms. When the meltdown arrives the media wi…"
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Bond Quotes and Performance Art – Bloomberg View

MustangMarch 24, 2017"A few comments: Pricing Sources: As we all know, there is no one point of value for a bond and in many respects, that is one inherent issue with pricing sources. The pricing reflects all sizes of a position. So, an oddlot is marked…"
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Bond Quotes and Performance Art – Bloomberg View

GooseMarch 24, 2017"There are solid parallels in here to threads we see in previous articles and commentary, where innovators think the process around market data can be improved. Trader: Most likely below where you care. 50- 2mm Weinstein: See it quot…"
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Rise of Bond ETFs Mean Little Mourning for the Middlemen – FT

Tried and failed.March 24, 2017"I am a bit late to this discussion, but there is a very important point to make about ETF liquidity; it is absolutely not dependent on secondary bond market liquidity. Firstly ETF market makers are rarely bond dealers, they are usua…"
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Bond Quotes and Performance Art – Bloomberg View

MerlinMarch 24, 2017"No new news here but allows us to pontificate a little on some things. Boaz Weinstein ran Deutsche Banks global credit business. He knows how the business works and he knows not to depend on quotes, never mind one point quotes on tr…"
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Bond Quotes and Performance Art – Bloomberg View

JesterMarch 24, 2017"First of all, Matt Levine is the James Brown of financial market structure media. Puts in work almost every day. Respect! This topic of bond quotes and valuations is not unlike the hoax that parents play on their children at Christm…"
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Bond Quotes and Performance Art – Bloomberg View

Tried and failed.March 24, 2017"Just wondering who outside the bond market would find anything extraordinary about the client to trader dialogue? Regulators may be a little surprised of course, so might end investors. The key point is that bond market liquidity is…"
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Bond Quotes and Performance Art – Bloomberg View

IcemanMarch 24, 2017"I think this story highlights 2 key points. One is that unless pricing comes directly from risk it is open to manipulation. This is is interesting given most if not all market data companies tell the world they have the best pricing…"
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Obstacles to Innovation in Fixed Income – Grant Wilson / Byron Cooper-Fogarty (Tabb Forum)

IcemanMarch 18, 2017"In reality what this article highlights is it is easier for people to make noise about something that they feel is wring than actually support change through actions and as has been highlighted investment. Change does not happen ove…"
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Obstacles to Innovation in Fixed Income – Grant Wilson / Byron Cooper-Fogarty (Tabb Forum)

CelticBondMarch 17, 2017"Well FI has not taken on board a number of the innovations that has propelled FX or exchanged traded securities. Calling for innovation when invention is required. As mentioned already the statement 'vested interests' well that is t…"
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Obstacles to Innovation in Fixed Income – Grant Wilson / Byron Cooper-Fogarty (Tabb Forum)

WolfmanMarch 17, 2017"Whilst I agree that technology can solve many of the perceived problems in fixed income trading, we must also follow the money. The incumbents are widespread. Traders, sales people, portfolio managers and yes, even the technology le…"
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Obstacles to Innovation in Fixed Income – Grant Wilson / Byron Cooper-Fogarty (Tabb Forum)

CougarMarch 17, 2017"The elephant in the room is (in)vested interests. In getting a large number of banks to work together on an initiative larger banks often own stakes in the incumbent market infrastructure firms. While these banks own business or cli…"
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Buy-Side Tech Spend in Focus – Markets Media

SliderMarch 10, 2017"5% YOY increase in spend allocation into technology is good but I fear that with rising rates and a more liquid/robust Fixed Income market, people may get comfortable again with business as usual leading them to be flippant regardin…"
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Buy-Side Tech Spend in Focus – Markets Media

GooseMarch 10, 2017"Recognition that you need to increase spending on technology is a good start. I absolutely agree that your OMS is a good place to focus that increase. Slowly but surely, progress is being made in allowing asset managers to aggregate…"
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Buy-Side Tech Spend in Focus – Markets Media

WolfmanMarch 10, 2017"I think the big story here is the focus on reducing the cost of terminals in order to allocate greater resources to other technologies like OMS. The 900 pound orange and black gorilla won't go away easily and will continue to develo…"
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The Asset-Management Pressure Cooker – Bloomberg Gadfly

GooseMarch 3, 2017"Good points all. I would add govt intervention skewing fundamentals has made it harder to realize active mgmt gains.…"
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The Asset-Management Pressure Cooker – Bloomberg Gadfly

CougarMarch 3, 2017"This article highlights some interesting asset management developments over the last few years: 1. The outcome of increasing correlation of markets & asset classes’ behavior - diminishing the attractions and ability of active fu…"
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The Asset-Management Pressure Cooker – Bloomberg Gadfly

ViperMarch 3, 2017"It seems like a pretty inevitable path but asset managers have enjoyed an unprecedented growth in assets and revenues for a while. Market rallied all around them and we went straight line tighter for the last 5-6 yrs. It is easy to…"
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The ETF Illusion: An Inside Look – Seeking Alpha

Tried and failed.February 25, 2017"I agree, the secondary market infrastructure for bonds (Corp & HY) is expensive, inefficient and in decline. Everyone knows that, whether they invest in individual bonds, mutual funds or ETFs. The secondary market actually profi…"
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The ETF Illusion: An Inside Look – Seeking Alpha

SundownFebruary 24, 2017"This has been a long topic of debate. I think there is some merit to the story, but I think ETFs are labeled as the problem when mutual funds have a much larger foot print and the same issues. The true underlying problem is the mech…"
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A Little-Known Startup Has Quietly Amassed 100,000 Wall St Users – Business Insider

JesterFebruary 17, 2017"I haven’t run into many people in our industry that really understand what OpenFin is and how it is supposed to make things easier. Let’s put it this way. Remember when most people used AOL for internet and about once a week they wo…"
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A Little-Known Startup Has Quietly Amassed 100,000 Wall St Users – Business Insider

WolfmanFebruary 17, 2017"People used to say that Rodney Dangerfield was an overnight success story, even though he didn't make it in stand-up until he was in his mid 40s, even though he began writing comedy routines when he was 15! Ok, I'm a Dangerfield fan…"
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IOSCO Research Paper on FinTech (Read Pages 37- 45)

WolfmanFebruary 10, 2017"Once again, features selected by the Friday Newsletter make this a must-read site. This is a comprehensive, neutral and easy to understand state of the state research piece. As a market geek, I was particularly impressed with the ex…"
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Nasdaq to Overhaul its Fixed Income Trading Business – Financial Times

SundownFebruary 6, 2017"If one remembers why Nasdaq bought eSpeed is because Bob Greifeld was betting (prematurely) on the volumes and volatility to return to the UST market and hence become a strong player in fixed income. He paid an absurdly high price f…"
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Nasdaq to Overhaul its Fixed Income Trading Business – Financial Times

GooseFebruary 3, 2017"I was always impressed with the sale price vs. the market share and instrument breadth of eSpeed. This is cuffing it, so perhaps a poster/reader has a more accurate depiction. At the sale, you had the treasury market, IDB market ~40…"
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If A Tree Falls in the Forest: Illuminating the True Costs of Corporate Bond Electronic Trading – ViableMkts

StingerFebruary 3, 2017"Great points, Merlin...really sobering.…"
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Nasdaq to Overhaul its Fixed Income Trading Business – Financial Times

WolfmanFebruary 3, 2017"This appears to be a full departure from the on the run treasury business, the largest and most electronic fixed market globally. For NASDAQ to abandon it and focus on the off the run market seems odd. With the expiry of the non-com…"
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If A Tree Falls in the Forest: Illuminating the True Costs of Corporate Bond Electronic Trading – ViableMkts

MerlinJanuary 28, 2017"I really like Jester and Goose's comments (and I am sure I have taken shots at them before), they are spot on. I encourage the buy side to read their electronic trading vendor user agreements as my guess is 99% of those trading on t…"
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If A Tree Falls in the Forest: Illuminating the True Costs of Corporate Bond Electronic Trading – ViableMkts

GooseJanuary 28, 2017"I was at a recent conference where I heard a buy side firm say "they wanted the incumbents to develop the better protocols they are seeing from new entrants". That gets a 100 on the laugh-o-meter. Yes, let me step right up and devel…"
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If A Tree Falls in the Forest: Illuminating the True Costs of Corporate Bond Electronic Trading – ViableMkts

JesterJanuary 28, 2017"Let me give you readers the Fisher Price version of this article: There is no price competition for corporate bond electronic trading and this is costing the asset management community a TON in transaction fees. Why this is happenin…"
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If A Tree Falls in the Forest: Illuminating the True Costs of Corporate Bond Electronic Trading – ViableMkts

SliderJanuary 27, 2017"This is one of those "set it and forget it" kind of things. Definitely an important issue to bring to the forefront!…"
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If A Tree Falls in the Forest: Illuminating the True Costs of Corporate Bond Electronic Trading – ViableMkts

MerlinJanuary 27, 2017"Very timely indeed. What do corporate bond investors pay for their electronic execution and are they properly measuring best execution? The author and Goose suggest the buy side does 80% of their electronic business with 20 or 25 de…"
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If A Tree Falls in the Forest: Illuminating the True Costs of Corporate Bond Electronic Trading – ViableMkts

GooseJanuary 27, 2017"This article mimics my experience when speaking with several buy side firms about FI e-trading costs. Some have no idea they are charged anything, some have a vague idea, most may know there is a charge but have made no effort to me…"
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Pricing (Corporate Bonds) in the Dark – Risk Magazine (free download)

SliderJanuary 20, 2017"I think the buy-side is also scarred by what happened in 2008. They understand now that given the evolving regulatory environment, they don't ever want to be beholden to dealers for liquidity. And why should they be at this point gi…"
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Pricing (Corporate Bonds) in the Dark – Risk Magazine (free download)

GooseJanuary 20, 2017"Risk takes up the mantle on a critical liquidity topic that hasn’t gotten much coverage. Dealer price discovery continues to diminish to the detriment of the dealers, and just as importantly, to the buy side. While the buy side can…"
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Pricing (Corporate Bonds) in the Dark – Risk Magazine (free download)

WolfmanJanuary 20, 2017"Information was not at the core of the dealer-as-market-maker model - capital was. In the vacuum left by persistently low rates and regulatory restrictions on capital at risk, the buy-side is engaging as price makers. Rates aren't s…"
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Pricing (Corporate Bonds) in the Dark – Risk Magazine (free download)

CougarJanuary 20, 2017"I agree with Viper's points. We know the sellside is starving secondary trading of balance sheet for years because the business was not economically viable from capital costs, and more recently increased information asymmetry biased…"
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Pricing (Corporate Bonds) in the Dark – Risk Magazine (free download)

ViperJanuary 20, 2017"Buy side does have an edge at the moment. Sell side has lost control of the information flow. The quicker it can consolidate the stream of pricing information, the more quicker the imbalance of the information advantage can be corre…"
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Wall Street Startup Backed by Soros and Thiel is in Talks to do a Big Deal – Business Insider

JesterJanuary 15, 2017"I hope for the best for these two initiatives, but the numbers don’t look good. Mainly, the institutional corporate bond market simply doesn’t have enough activity to create a meaningful electronic trading business around. One thing…"
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Wall Street Startup Backed by Soros and Thiel is in Talks to do a Big Deal – Business Insider

WolfmanJanuary 13, 2017""The combination would combine the two platforms' user bases". Electonifie has "unique users" and will be added to "TruMid's actively engaged users". I'm not clear as to what this really means for the merger. There's no clarity as t…"
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‘Trust But Verify’ in Bond Market – Bloomberg

MerlinJanuary 6, 2017"What do you think market makers do if the don't "make up a price"? Who/where do they get the price from? If someone else, how did the first person in the chain come up with the price? All prices are "made up " in that it represents…"
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‘Trust But Verify’ in Bond Market – Bloomberg

GooseJanuary 6, 2017"I agree with Merlin. This, or shades of it, happen in every pool of commerce out there. You, Mr. Institutional Investor, pulled up your trusty Bloomberg, ran the bond with your own assumptions, and decided there was value in the sec…"
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‘Trust But Verify’ in Bond Market – Bloomberg

SliderJanuary 6, 2017"If he gets off, it would set an extremely bad precedence. Its time for the corporate bond market to head toward transparent pricing - yes you can't make the kind of money you used to anymore if prices are transparent but it is what…"
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‘Trust But Verify’ in Bond Market – Bloomberg

MustangJanuary 6, 2017"This is a complete and utter joke. This defense seems ludicrously stupid. I am pretty sure they got this defense from Animal House: "...You can't hold a whole fraternity responsible for the behavior of a few, sick perverted individu…"
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‘Trust But Verify’ in Bond Market – Bloomberg

MerlinJanuary 6, 2017"Come on, people lie and have always lied in the bond market all the time. This is one of the reasons the corporate bond market is screwed up, you can't make money anymore! Where is it written that a bond trader has to tell a client…"
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‘Trust But Verify’ in Bond Market – Bloomberg

Brad from TorontoJanuary 6, 2017"No one is lying about price, quantity or bonds. They are making up stories for story bonds.... 5 years in jail for that? Seriously?…"
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‘Trust But Verify’ in Bond Market – Bloomberg

WolfmanJanuary 6, 2017"There are good and bad in all industries, and when the bad outnumber the good, they invite regulator in to clean up the mess. When I began working on Wall Street, I was told that the foundation of a successful career was to remember…"
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‘Trust But Verify’ in Bond Market – Bloomberg

CougarJanuary 6, 2017"My comment will likely jar with bond market dealers. You cannot lie. It is wrong. If you build a business from which you profit based on lies in a highly regulated industry you should expect punishment. Investors exercise their fidu…"
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Tensions Build Over Bond Allocations and Pricing Feedback – Overbond.com

GooseDecember 16, 2016"Breaking down the wall of the new issue construct will be no easy task. It’s been a new issue dream market for awhile now, deals crowded with firms reaching for yield, syndicate desks are shooting fish in a barrel. Auction style IPO…"
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Tensions Build Over Bond Allocations and Pricing Feedback – Overbond.com

MerlinDecember 16, 2016"The new issue process in corporate bonds is criminal activity that the regulators have ignored for years. Playing favorites is the rule not the exception. And there is plenty of reason to play favorites; see more secondary flow, tak…"
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Tensions Build Over Bond Allocations and Pricing Feedback – Overbond.com

WolfmanDecember 15, 2016"Well, well, well, we really seem to have hit a nerve with the 10,000 hours team. It's hard to ignore the sarcastic cynicism with which the experts evaluate the syndicate relationships. It's clearly based on fundamentals that over th…"
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Tensions Build Over Bond Allocations and Pricing Feedback – Overbond.com

MustangDecember 15, 2016"I always wonder why regulators turn a blind eye to so many clearly obvious "inequities" in FI. In particular, I like this line: "Issuers are paying us for our distribution capabilities and certainty of execution.” If the secondary m…"
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Tensions Build Over Bond Allocations and Pricing Feedback – Overbond.com

JesterDecember 15, 2016"This….this article is a masterpiece of comedy. Be careful institutional buy-side clients and syndicate desks. If you argue too loudly, people might overhear how incredibly corrupt the primary market is for corporate bonds. Shhhh. Ke…"
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Tensions Build Over Bond Allocations and Pricing Feedback – Overbond.com

SliderDecember 15, 2016"Pricing has nothing to do with 'investor feedback' and everything to do with supply and demand. The bigger problem in this space is the lack of structure around the new issue allocation process. Syndicate guys will allocate more bon…"
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Rise of Bond ETFs Mean Little Mourning for the Middlemen – FT

IcemanDecember 10, 2016"ETF's are certainly the product of the day at the moment driven in no small part by Blackrock referring to them at every turn which again is no surprise given they generate a significant amount of revenue from the product. There is…"
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Rise of Bond ETFs Mean Little Mourning for the Middlemen – FT

MerlinDecember 9, 2016"Here is something to think about. How do you value a corporate bond ETF if there are no underlying markets/prices in the bonds making up the ETF???? By definition do the ETF market makers also become the de facto market makers for t…"
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Rise of Bond ETFs Mean Little Mourning for the Middlemen – FT

GooseDecember 9, 2016"Exchange traded ETF’s bring together retail and institutional interest in a myriad of investment strategies across several adjacent FI products. I believe that has to drive flow downstream for larger outright and complex cash trades…"
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Rise of Bond ETFs Mean Little Mourning for the Middlemen – FT

WolfmanDecember 9, 2016"There's no doubt that ETFs are having an impact on trading activity in fixed income, but it seems to me that the underlying processes of creation and redemption will generate activity in the underlyings as well as "upstairs" block E…"
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Sellside to join Liquidnet as they warm to fixed income fintech (Reuters)

SliderDecember 5, 2016"Agree with everyone else here. Doubtful there will be much liquidity without the big dealers as is always the case. I am also curious as to the fee structure as well.…"
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Sellside to join Liquidnet as they warm to fixed income fintech (Reuters)

MerlinDecember 1, 2016"If there is one thing everyone has learned by now, it is that the major dealers have zero interest in supporting an all to all platform. In the article itself they even state, "Most of the sellside interest is coming from regional b…"
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Sellside to join Liquidnet as they warm to fixed income fintech (Reuters)

JesterDecember 1, 2016"I absolutely love the headline for this article. Reuters, have you no shame? From what I can tell, this is simply a change in policy by Liquidnet to allow the sell-side access to their fixed income platform. What this article fails…"
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Sellside to join Liquidnet as they warm to fixed income fintech (Reuters)

WolfmanDecember 1, 2016"It seems that deep pockets will come in handy for this launch and I'm curious as to what the fee structures are. The industry in general bemoans the high fees associated with MA and if Liquidnet can survive months of on-boarding liq…"
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ICAP’s Spencer Reboots Market Stalwart With Bet on Digital – Bloomberg

SliderNovember 18, 2016"This makes complete sense given how inefficient and archaic the IDB market is. "Spencer is betting the house on committing everything to electronic platforms, No one else in the interdealer broker industry has done that before." No…"
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ICAP’s Spencer Reboots Market Stalwart With Bet on Digital – Bloomberg

GooseNovember 18, 2016"As this article discusses, this move by ICAP screams like a giant “FOR SALE” sign to me. Lose the complex, messy, contract laden, potential lawsuit, overlap of the voice business. “Stitch together a mosaic of existing and developing…"
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ICAP’s Spencer Reboots Market Stalwart With Bet on Digital – Bloomberg

JesterNovember 18, 2016"This strategy by ICAP….excuse me, NEX, makes one of two assumptions. 1) NEX can build a formidable tool kit of electronic market solutions which would eventually turn the company into an attractive takeover target for larger players…"
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ICAP’s Spencer Reboots Market Stalwart With Bet on Digital – Bloomberg

WolfmanNovember 18, 2016"A brilliant move to position NEX for a buyout and reach for high margin business lines. There are risks, however, when moving a company into a utility space. With continued standardization of formats and an increasingly cost-constra…"
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Trump’s Transition Team Pledges to Dismantle Dodd-Frank – Bloomberg

WolfmanNovember 12, 2016"There are numerous components of DF that have little to do with improving the safety and soundness of markets such as hiring quotas for banks. CLEARLY, there are also components that have improved the system and whose principals are…"
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Trump’s Transition Team Pledges to Dismantle Dodd-Frank – Bloomberg

SliderNovember 11, 2016""Big banks got bigger," sounds like such a classic Trump 'talking point'. When you're measuring market cap, not the case. Are we going to keep going through boom and bust cycles? Are we EVER going to learn from our mistakes?…"
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Euronext and Algomi Look to Deepen Bond Liquidity – Markets Media

IcemanNovember 6, 2016"Very interesting point on the SIX work that has been going on with Algomi and how this will be coexist. On the face of it being linked to both SIX (for some years) and then flipping into Euronext and JV'ing to launch a competing iss…"
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Euronext and Algomi Look to Deepen Bond Liquidity – Markets Media

MerlinNovember 4, 2016"This article seems to confuse issues. This JV appears to be an IDB using dark pool fuzzy matching as its protocol. Which, if I am not mistaken, is identical to what SIX is running on the same Algomi technology. But the author then q…"
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Euronext and Algomi Look to Deepen Bond Liquidity – Markets Media

GooseNovember 4, 2016"From the high level of information given, this is a nice validation of a piece of the technology Algomi has built. Euronext gets access to tech that is not core to its current matching trading technology, Algomi gets a partner with…"
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Euronext and Algomi Look to Deepen Bond Liquidity – Markets Media

StingerNovember 4, 2016"This combination is very interesting, with Algomi having had a difficult time generating paying customers for its traditional business of information processing. The concept makes a lot of sense although I believe it is at odds with…"
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Euronext and Algomi Look to Deepen Bond Liquidity – Markets Media

CougarNovember 4, 2016"It's great to see so much hard work being rewarded in the case of Algomi. This should now ensure their future (for 10Y!). What started as a very ambitious, independent platform now focuses on a well-placed turnkey technology solutio…"
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Euronext and Algomi Look to Deepen Bond Liquidity – Markets Media

WolfmanNovember 4, 2016"Great job by Shanny Bassar in putting this story together and gathering views from some very well-respected experts in this area. To Brad Baily's point, having an incumbent engage in a partnership with a technology solution is a sig…"
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A Handful of Giant Investors Have the Fate of the Bond Market in Their Hands – Business Insider

MerlinOctober 28, 2016"Hi Wolfie, I am not sure I agree with point #3 stating that execution fees have been driven down due to technology. MarketAxess is trading what, 80,, 85, 90% of corporate bond volume in N.A. and don't think their fees have budged. A…"
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A Handful of Giant Investors Have the Fate of the Bond Market in Their Hands – Business Insider

MerlinOctober 28, 2016"The article makes already well know points. The question regarding the fate of the bond market is how these mutual funds actually manage their funds and if they are making appropriate changes to cushion themselves against an onslaug…"
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A Handful of Giant Investors Have the Fate of the Bond Market in Their Hands – Business Insider

GooseOctober 28, 2016"Agreed Slider. It was quite interesting how Blackrock enjoyed the asset growth banquet, but in 2014 began to voice their opinion on liquidity http://i.imgur.com/4rSna2d.gif Then the SEC began to consider the concept of regulating th…"
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A Handful of Giant Investors Have the Fate of the Bond Market in Their Hands – Business Insider

SliderOctober 28, 2016"I am continually hearing anecdotes of how the big funds are being allocated egregious shares of new issue deals which exacerbates this inequity. The market should now be considering the "too big to fail" theory as it relates to the…"
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A Handful of Giant Investors Have the Fate of the Bond Market in Their Hands – Business Insider

WolfmanOctober 28, 2016"1. We have regulatory pressures, increasing costs and decreasing revenues driving consolidation across the industry. 2. Most investors own credit products via mutual funds and an increasingly large number of ETFs. 3. Technology has…"
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A Handful of Giant Investors Have the Fate of the Bond Market in Their Hands – Business Insider

CougarOctober 28, 2016"The bond ownership distribution is already a significant problem now. Forgetting market conventions and norms, materially large funds will receive better pricing of trades - disadvantaging the smaller funds' investors - provide mark…"
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Innovation and Evolution in the Fixed Income Market – Vanguard Report

AndrewOctober 26, 2016"Unsurprisingly, Vanguard’s blueprint for improvement in the fixed income market (or should that be markets?) provides (5 ) broad, rational strategic recommendations. The recommendation to limit trading fragmentation, at first glance…"
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Innovation and Evolution in the Fixed Income Market – Vanguard Report

GooseOctober 21, 2016"Thank you Vanguard. It’s a big positive to have another voice in the game, and a buy sider at that. I am still very suspect on banging the “all is well” gong on bid/offer spreads from the Fed Paper. Dedicated FNL’ers will know there…"
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Innovation and Evolution in the Fixed Income Market – Vanguard Report

WolfmanOctober 21, 2016"As usual, FN selects articles that require some thought. So much so In this case that I'm going to follow the Ignatian contemplation method and place myself into the story. For the buy-side, navigating through the profound regulatio…"
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Innovation and Evolution in the Fixed Income Market – Vanguard Report

StingerOctober 21, 2016"Nice piece by Vanguard, doing a great job summarizing the state of play and identifying the main factors for success. I wonder if they are voting with their feet/business, and working with the platforms that cover their suggested po…"
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Innovation and Evolution in the Fixed Income Market – Vanguard Report

CharlieOctober 21, 2016"Someone learnt from BlackRock's mistakes! If you are a fund manager you don't scream the sky is falling unless you want to attract a regulators attention you publish a nice article saying all is well! The article makes a really good…"
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Bond Platforms Form Lobby Group to Tackle MiFID II – The Trade

Voodoo3October 14, 2016"David Bullen was formerly head of FI ebusiness (or something similar to that) at Citigroup. He has been consulting for various initiatives since leaving Citi 3/4 years agi and has been diligent in following theEuropean regulatory sp…"
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Bond Platforms Form Lobby Group to Tackle MiFID II – The Trade

Voodoo3October 14, 2016"On paper a good initiative but can't help to be disappointed in how late the participants have come to the table, what Btec Europe is supposed to be contributing to this initiative with a sub 1% marketshare, why Bloomberg isn't ther…"
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Bond Platforms Form Lobby Group to Tackle MiFID II – The Trade

SliderOctober 14, 2016"Who is David Bullen? Does anyone else find it odd that the article states that he has been appointed to lead this whole initiative but provides no detail about him?…"
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Bond Platforms Form Lobby Group to Tackle MiFID II – The Trade

MerlinOctober 14, 2016"While not a surprise that FI electronic trading venues want to have clarity on what is expected of them to operate within the confines of Mifid II, does anyone else find this quote strange from Mr. Bullen, "....EDMA members who toge…"
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Bond Platforms Form Lobby Group to Tackle MiFID II – The Trade

GooseOctober 14, 2016"I wish there was a bit more detail, but certainly interesting. It makes solid business sense to try this given the shifting regulatory landscape in Europe. A few thoughts -Hey, the electronic platforms are definitely feeling their o…"
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Bond Platforms Form Lobby Group to Tackle MiFID II – The Trade

WolfmanOctober 14, 2016"This should come as no surprise. During the Dodd Frank legislative period when the (then) five largest interdealer brokers came together to form the WMBAA, the pundits pushed back suggesting that they couldn't effectively promote th…"
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FridayNewsletter Exclusive: Fixed Income Sales Workflow Systems – Some Assembly Required

WolfmanOctober 7, 2016"Kudos to CodeStreet (and the author who was there at the beginning) for seeing the potential that SWS systems could have. These sorts of systems are completely necessary for any agency broker to find liquidity quickly (before her co…"
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FridayNewsletter Exclusive: Fixed Income Sales Workflow Systems – Some Assembly Required

MustangOctober 7, 2016"Interesting piece co-authored by two people very much in the know. A few thoughts: 1. Necessity: If FI is an industry that requires people, then this alone will tell you whether an "SWS" is needed. Look to any other industry that re…"
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FridayNewsletter Exclusive: Fixed Income Sales Workflow Systems – Some Assembly Required

ViperOctober 6, 2016"Fixed income flow sales is desperately trying to protect whatever is left of the franchise. The franchise is supported by the new issue machine that is greased by the low interest rate environment. It's not only trying to compete wi…"
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Deutsche Bank, UBS, RBS Said to Mull Selling Tradeweb Stakes – Bloomberg

MerlinSeptember 30, 2016"I have to go with Hollywood on this one. TW, even with the burden of the dealers, has done a good job of expanding into a much broader product set than MarketAxess who still somehow manages to con both the buy and sell side into pay…"
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Deutsche Bank, UBS, RBS Said to Mull Selling Tradeweb Stakes – Bloomberg

SliderSeptember 30, 2016"Piggybacking off Chipper's comment, to me, this is a classic example of how 'protectionist' culture eventually leads to a company's demise. Existing to slow down innovation is never a good business model! What will it take for the F…"
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Deutsche Bank, UBS, RBS Said to Mull Selling Tradeweb Stakes – Bloomberg

ChipperSeptember 30, 2016"What is TW worth if the dealers no longer have a financial stake? I say not much. Yes, being out from under the thumb of the dealers may allow them to innovate, but the whole reason they exist is to slow down innovation in the OTC m…"
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When Keepin It Old School Goes Wrong: Debating Transparency in FI Markets – ViableMkts

GooseSeptember 30, 2016"But if you use any IDB information to help determine the bid/offer you show your client you are making a price based on other peoples prices. Now if you are talking about just taking a street bid and making it your own, or just penn…"
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When Keepin It Old School Goes Wrong: Debating Transparency in FI Markets – ViableMkts

MerlinSeptember 30, 2016"I don't think I said it is not an essential piece of one's workflow. What I said was that traders shouldn't be making prices based on others prices. Recipe for disaster in an illiquid market. Don't bid 98 3/4 on a bond you have no m…"
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When Keepin It Old School Goes Wrong: Debating Transparency in FI Markets – ViableMkts

GooseSeptember 30, 2016"Merlin, thoughtful commentary and am curious on your take on the IDB markets; only C players use them to price bonds and dealers are routinely giving up where markets are and trades are happening in the street so clearly not protect…"
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Deutsche Bank, UBS, RBS Said to Mull Selling Tradeweb Stakes – Bloomberg

GooseSeptember 30, 2016"The themes of , regulation, lawsuits, financial health all tie into why this likely makes sense for these 3. Unfortunately for the 3, the cash generated from the sale is like putting a strand of scotch tape over end of a firehose. A…"
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Deutsche Bank, UBS, RBS Said to Mull Selling Tradeweb Stakes – Bloomberg

HollywoodSeptember 30, 2016"I respectfully disagree with Jester. In relative terms: What other platforms have innovated into additional asset classes in a meaningful way? Moreover, TW has vastly added Credit pieces: IG, HY, LatAm, CDS Index, CDS Single Name. I…"
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Deutsche Bank, UBS, RBS Said to Mull Selling Tradeweb Stakes – Bloomberg

MustangSeptember 30, 2016""For these dealers [UBS, DB, RBS], the game of preventing innovation in fixed income is not one that serves their long term interests. What will be most interesting is to see which of the remaining superpowers doubles down and buys…"
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Deutsche Bank, UBS, RBS Said to Mull Selling Tradeweb Stakes – Bloomberg

WolfmanSeptember 30, 2016"Do you guys remember who Jimmy McMillan was? I bring him up because there's a self-evident truth here. The costs associated with TW are too damn high (thanks Jimmy!) and the EUROPEAN banks are rumored to be seeking an exit. The move…"
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Deutsche Bank, UBS, RBS Said to Mull Selling Tradeweb Stakes – Bloomberg

JesterSeptember 30, 2016"Can’t decide what is more interesting about this situation, the fact that 3 dealers have come to the conclusion to sell at the same time (Fire Sale?) or that these dealers were 3 of the less powerful (sorry DB) dealers in the TW con…"
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Deutsche Bank, UBS, RBS Said to Mull Selling Tradeweb Stakes – Bloomberg

Voodoo3September 30, 2016"Is this the end of bank-owned consortia? maybe... Innovation over the years, especially in fixed income, has been bank-led/dominated/owned/controlled/all-the-above or -sometimes- exchanges. Those days are probably over.. at least fr…"
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Deutsche Bank, UBS, RBS Said to Mull Selling Tradeweb Stakes – Bloomberg

MerlinSeptember 30, 2016"This seems to make a ton of sense. There is really no reason for the tertiary dealers to still be involved in TradeWeb. Based on MKTX valuation their TW stakes should have some decent value. Cash in and still participate on TW if it…"
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When Keepin It Old School Goes Wrong: Debating Transparency in FI Markets – ViableMkts

MerlinSeptember 30, 2016"i forgot one thing. Dealers use the IDB madket to move/take on risk when it fits them, not to price bonds, except for the C players. It is the access to liquidity they are protecting, not pricing information. in fact, dealers are ro…"
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When Keepin It Old School Goes Wrong: Debating Transparency in FI Markets – ViableMkts

MerlinSeptember 29, 2016"Hello Jester, hope you are well. Sorry for the delay in my response; for some reason I was not notified of your diatribe. I did not say that bond traders are 'mythical creatures that price risk blindfolded and just "feel" the market…"
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When Keepin It Old School Goes Wrong: Debating Transparency in FI Markets – ViableMkts

JesterSeptember 28, 2016"Thank you Merlin for providing the comedy relief this week. Your impression of an out of date, caveman trader was spot on. That was awesome and in jest right? Right? Because nobody could write something like this with a straight fac…"
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When Keepin It Old School Goes Wrong: Debating Transparency in FI Markets – ViableMkts

MerlinSeptember 26, 2016"Sorry for the tardiness in getting this comment in. I do not agree that transparency is the solution to the liquidity problem in corporate bonds for round lots nor do I believe that if a dealer knows where someone else is bidding/of…"
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When Keepin It Old School Goes Wrong: Debating Transparency in FI Markets – ViableMkts

SliderSeptember 23, 2016"This makes a lot of sense to me. Transparency enhances price integrity. Price integrity leads to more confidence in the markets resulting in more activity. There isn't a single market that isn't under disruption right now starting f…"
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When Keepin It Old School Goes Wrong: Debating Transparency in FI Markets – ViableMkts

GooseSeptember 23, 2016"I agree with the basic concepts outlined here: rapid market growth, balance sheet curtailment, has led to much more pricing ambiguity. Just look at the IDB market. The street was a main place in price discovery for dealers, now the…"
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When Keepin It Old School Goes Wrong: Debating Transparency in FI Markets – ViableMkts

WolfmanSeptember 23, 2016"I love movie quotes and kudos to Viable Markets for picking some great ones! I have a few of my own that I think can help us get to the core of what's going on here. “One of the funny things about the stock market is that every time…"
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ICAP and the Buy-side – The Desk

MerlinSeptember 16, 2016"Jester, what got into you this week? Not sure why everyone is acting as if this is new news. Well known since the beginning of the year. Actually surprised it has taken them so long to move forward. Plus, what is really the big deal…"
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ICAP and the Buy-side – The Desk

MustangSeptember 16, 2016"Ay ay ay, Where to begin. Bravo to ICAP for taking a step in the right direction. I want to reiterate a term that Wolfman mentioned: "emasculated the dealers ". You see, while ICAP is getting the rightful recognition for innovating…"
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ICAP and the Buy-side – The Desk

JesterSeptember 16, 2016"Bravo on the innovative step forward by ICAP. This looks like a much better idea than their previous buy-side focused CrossTrade venture (sponsored by Bad Idea Jeans). Perhaps some of the recent departures from their eCom leadership…"
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ICAP and the Buy-side – The Desk

WolfmanSeptember 16, 2016"I agree with Cougar. Regulatory pressures to reduce proprietary trading to minuscule levels have emasculated the dealers and forced them to find new ways to service their clients without using their capital as the centerpiece of the…"
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ICAP and the Buy-side – The Desk

CougarSeptember 16, 2016"This path is the natural culmination of changed to the bank and IDB relationship since the crisis. At the height of the credit crisis credit traders would happily hit agency brokers' bids a formerly taboo interaction. When that rela…"
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US Regulators Allow BlackRock Funds to Lend to One Another – Reuters

WolfmanSeptember 9, 2016"I'm with Merlin on this one. It sounds like something that the fund wants to do, but doesn't seem like something I'd want them to do with my money. Maybe the 5,300 people who got fired from Wells Fargo can help sort it out...…"
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US Regulators Allow BlackRock Funds to Lend to One Another – Reuters

MerlinSeptember 9, 2016"No expert on inter-fund lending practices but this doesn't smell right to me. I understand from the article that such practices are 'common' and already in place at Fidelity and Vanguard but why? The article states that MF investors…"
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Wall Street Startup Direct Match: We Will Not Be Able to Execute Our Vision Any Time Soon – Business Insider

GooseAugust 29, 2016"I am really curious about the clearing side of this equation. Why are there no other tier one netting FICC member's who would handle this kind of business? I mean, being a clearing member you would want more business to clear, corre…"
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Wall Street Startup Direct Match: We Will Not Be Able to Execute Our Vision Any Time Soon – Business Insider

MustangAugust 26, 2016"I commend DM for their effort. We need more competition and innovators in Fixed Income. My comments are not directed at them. Instead, it is directed at the screwed up market that we operate in. The largest issues in Fixed Income AT…"
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Wall Street Startup Direct Match: We Will Not Be Able to Execute Our Vision Any Time Soon – Business Insider

SundownAugust 26, 2016"I would like to preface this note by saying that I commend Mr. Greco for his efforts and willingness to find a solution to some of the liquidity issues in the U.S. Treasury market. I urge you to read Kevin McPartland of Greenwich As…"
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Wall Street Startup Direct Match: We Will Not Be Able to Execute Our Vision Any Time Soon – Business Insider

WolfmanAugust 25, 2016"New ideas need to follow old rules and answer some simple questions, and I certainly haven't listed them all. Feel free to add more in your replies. 1. Does it solve a problem? 2. How many people have this problem? 3. How many other…"
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Is the Future of Last Looks (in fixed income eTrading) Tied to Information? – FixTHub

CharlieAugust 19, 2016"Agree with your request for a definition of 'last look' here. We have said many times that the fixed income market is not the equity market and it would be good if regulators and participants stopped trying to push a square peg in a…"
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Is the Future of Last Looks (in fixed income eTrading) Tied to Information? – FixTHub

GooseAugust 19, 2016"Interesting point Mustang. I think the key is looking at the state of equities today. The lit order books reflect the result of a fair access, anonymous, executable market. Off-exchange market share in July 2016 increased 2% month-o…"
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Is the Future of Last Looks (in fixed income eTrading) Tied to Information? – FixTHub

StingerAugust 19, 2016"The term "Last Look" is a little confusing here. In my experience that refers to a client coming back to a dealer and giving them a chance to trade a bond at or better than the best price the client found in the market. I know that…"
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Is the Future of Last Looks (in fixed income eTrading) Tied to Information? – FixTHub

WolfmanAugust 19, 2016"Equities are a products designed for retail traders/investors whose numbers are in the tens of thousands on any given day. Fixed income as an asset class trades much less frequently and for very different trade objectives. Individua…"
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Is the Future of Last Looks (in fixed income eTrading) Tied to Information? – FixTHub

MustangAugust 19, 2016"Wolfman-- interesting comparison to the travel industry. Something that I've thought recently... must be the full moon. While information asymmetry is abound in Fixed Income, it is also prevalent in every market, including equities,…"
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Is the Future of Last Looks (in fixed income eTrading) Tied to Information? – FixTHub

WolfmanAugust 19, 2016"On the surface, this is an interesting and well written analysis of the debate surrounding live, executable prices and last look. It made me think of the scene in the movie The Big Short when the hedge fund housed in Morgan Stanley…"
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A Tulip By Any Other Name: What Happened to the Big Bad CDS Market? – ViableMkts

MustangAugust 13, 2016"One of the issues was that it wasn't a proxy for the underlying bonds. News would come out, CDS would blow out 20, 30, 50, 75 (or much more), bonds would be unchanged and then CDS would be flat again. So, what was it really tracking…"
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A Tulip By Any Other Name: What Happened to the Big Bad CDS Market? – ViableMkts

MerlinAugust 13, 2016"Enjoyed the reminder, thanks. Jester seems a little harsh to me. While much went wrong it seems enough change and innovation has taken place to allow the CDS market to continue to exist. After all, there are a lot of use cases whe…"
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A Tulip By Any Other Name: What Happened to the Big Bad CDS Market? – ViableMkts

JesterAugust 12, 2016"This article is very timely considering CS just sold their CDS portfolio which means yet another market maker is out of the business. At this point, how many dealers are left? GS, JPM, BAML, Citi? Am I missing anyone? Hedging risk m…"
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A Tulip By Any Other Name: What Happened to the Big Bad CDS Market? – ViableMkts

WolfmanAugust 12, 2016"Great review of the CDS market by someone who was obviously surrounded by,or may have been one of, the key players. I'll talk a cue from the article and reference some great Marlon Brando quotes and oddly enough, it seems that they…"
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Now We Have Two Answers to the ECB Corporate Liquidity Question – Bloomberg

JesterAugust 7, 2016"This article and debate stops and starts with one key statement from this article: “Firstly, a big caveat is in order. There's no standard and objective measure of bond-market liquidity since bonds are predominately traded over the…"
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Now We Have Two Answers to the ECB Corporate Liquidity Question – Bloomberg

MustangAugust 5, 2016"I'm also in the camp that they are creating a bigger liquidity problem. It's very hard to surmise that the ECB isn't creating a liquidity problem when the author correctly admits that: "Firstly, a big caveat is in order. There's no…"
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Now We Have Two Answers to the ECB Corporate Liquidity Question – Bloomberg

GooseAugust 5, 2016"Like others, I am, um, very suspect that the emergence of the ultimate supertanker in the shallow waters of bond market liquidity will have no ill effect. Chart 2 seems to show a gradual widening of the non-eligible vs. the eligible…"
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Now We Have Two Answers to the ECB Corporate Liquidity Question – Bloomberg

MerlinAugust 5, 2016"I am in the camp viewing the ECB as creating a bigger liquidity problem. Not because they are competing with investors for bonds; in that regard they are just another player in the market, although a big one! But because the program…"
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Now We Have Two Answers to the ECB Corporate Liquidity Question – Bloomberg

CougarAugust 5, 2016"The ECB is infusing an otherwise artificial bid to the corporate bond market - forcing yields down to articially lower levels. Investment decisions by bona fide 'real' investors therefore become skewed in teh search for yield; in te…"
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Now We Have Two Answers to the ECB Corporate Liquidity Question – Bloomberg

WolfmanAugust 4, 2016"This is a very small market when compared to the sovereign debt markets of previous programs. If the BoE is limiting the purchases to Sterling-denominate corporate debt, it's even a smaller universe of bonds. Limit that choice to hi…"
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Project Sentinel Completes MiFID II Technology Specification – The Desk

WolverineJuly 29, 2016"The emergence of this project clearly illustrates that the historical models of buying or building core banking technology on an individual basis, particularly for the purpose of fulfilling regulatory obligations, are no longer viab…"
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Project Sentinel Completes MiFID II Technology Specification – The Desk

LeonJuly 29, 2016"The one year delay has provided an opportunity for the market participants to think strategically on MiFID II implementation. There is a small windows – closing quickly – for organisations to collaborate together and think outside o…"
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Project Sentinel Completes MiFID II Technology Specification – The Desk

CholoJuly 29, 2016"Inv.Banks have been too short sighted in terms of IT, and never wanted to share anything. Big mistake!!!! All of them are suffering on the cost side. It really makes a lot of sense to collaborate among like-minded banks, and share I…"
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Project Sentinel Completes MiFID II Technology Specification – The Desk

WolfmanJuly 29, 2016"Banks will always be reluctant to outsource their core competency, but there are myriad examples of coopetition when technological solutions are delivered. Banks generally don't build their own ATMs but do think of innovative ways t…"
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Project Sentinel Completes MiFID II Technology Specification – The Desk

Terence & PhillipJuly 29, 2016"You have got to think you will see more and more of these types of initiatives as Banks struggle with costs/profitability and regulation is such a burden on these. As per the other comments, it has to be in areas that Banks truly be…"
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Project Sentinel Completes MiFID II Technology Specification – The Desk

IcemanJuly 29, 2016"On the face of it when sell side and buy side alike continue to bemoan the increasing costs to doing business under an ever changing and restrictive regulatory regime were vendors seem to be making more money than ever it would seem…"
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Project Sentinel Completes MiFID II Technology Specification – The Desk

JesterJuly 29, 2016"It is funny how a disastrous piece of regulation like MiFID II can cause dealers to be more thoughtful about their distribution strategy. For too long fixed income dealers have been under the influence of their own Kool-Aid, believi…"
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Project Sentinel Completes MiFID II Technology Specification – The Desk

MerlinJuly 29, 2016"This seems like a worthy project to me. For far too many years individual banks have wasted hundreds, yes hundreds, of millions of dollars trying to build internal solutions for a multitude of problems and then tried to shoe horn di…"
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Blackrock’s Richard Prager: The Liquidity Is Out There – Institutional Investor

CelticBondJuly 23, 2016"Cougar, what I find interesting are the claims of all especially new Credit platforms regarding the 'liquidity' they have & posting increasing volumes. As you say just posting a price & some size does not that position a tra…"
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BlackRock to Push Wall Street Chat Tool – 4 Traders

CelticBondJuly 23, 2016"I agree with the comment & at $2k+ pm its a very expensive chat mechanism along with expensive analytics. Dealers must realise how much monies they gave away to BBG over the years & their own failures to build their own anal…"
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Morgan Stanley Profit Beats Estimates as Bond Trading Gains – Bloomberg

GooseJuly 22, 2016"A positive report, and just having earnings stability going forward in this environment would be a big plus. However, since FNL is mainly focused on the top stories in the credit market, this statement gives plenty of pause, “Foreig…"
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Morgan Stanley Profit Beats Estimates as Bond Trading Gains – Bloomberg

HollywoodJuly 22, 2016"The article states: “Maybe on an annual basis we are closing in on a sustainable and predictable level” for fixed-income revenue, Kotowski said. “That would be a significant positive after years of grinding lower industrywide, but o…"
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Bond World Grows Less Opaque – Bloomberg Gadfly

Voodoo3July 17, 2016"More data in 1s and 2s won't change the real structure of the market. This is noise rather than progress.…"
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Bond World Grows Less Opaque – Bloomberg Gadfly

JesterJuly 16, 2016"This article is one big bowl of assumptions, wrapped in a candy coated shell of myth topped with a cherry of a conclusion: Transparency is good for electronic trading, bad for big dealers. It is not the author’s fault, this is gener…"
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Bond World Grows Less Opaque – Bloomberg Gadfly

WolfmanJuly 16, 2016"Mother, mother ocean, after all these years I've found My occupational hazard being my occupation's just not around. Isn't it wonderful that the regulators want a component of market structure without really understanding the true i…"
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US Corporate Bond Market: What Year Is It? – ViableMkts

MustangJuly 15, 2016""You cannot create liquidity, but only try to ensure that all liquidity opportunities are actioned." In the current market, I wholeheartedly agree. I think too many are focused on creating new liquidity, when that seems like too hug…"
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US Corporate Bond Market: What Year Is It? – ViableMkts

MerlinJuly 12, 2016"There are no inputs. These "real time" pricing feeds are a sham. You will never create an oddlot market where you can hedge roundlot trades. You cannot auto trade a roundlot market. I am not convinced you can auto trade an oddlot ma…"
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US Corporate Bond Market: What Year Is It? – ViableMkts

matlami2016July 10, 2016"Completely agree - it's GIGO (garbage in garbage out) as far as these models go, right? The fundamental problem is lack of real-time reliable pricing inputs. And unlike, say, equities, the information to noise ratio of inputs from o…"
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US Corporate Bond Market: What Year Is It? – ViableMkts

JesterJuly 10, 2016"Since you asked for thoughts, I will oblige. Yes, there are several vendors working on real-time pricing for corporate bonds, but there is a large gap between their pitch and the performative reality of data in this market. For exam…"
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US Corporate Bond Market: What Year Is It? – ViableMkts

matlami2016July 10, 2016"Curious what people think of the following developments that may catalyze further electronification: 1) At least three vendors are working on real-time pricing models for corporate bonds. More prices in electronic markets make such…"
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US Corporate Bond Market: What Year Is It? – ViableMkts

GooseJuly 8, 2016"A brief, but thoughtful piece with a different angle. I agree with the answer. The key is around sequencing the development, with the foundation being quality pricing. The positive for the fixed income markets is that all the pieces…"
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US Corporate Bond Market: What Year Is It? – ViableMkts

JackJuly 8, 2016"As the CS Global Trading Form this past winter, ex-SEC Commissioner Gallagher stated that the SEC had more than 200 people working on equity market structure, and 1/2 of one person's time was spent on bond market structure. Measured…"
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US Corporate Bond Market: What Year Is It? – ViableMkts

CougarJuly 8, 2016"So the bond market is 46 years behind the equity market structure. I agree. However every attempt at improving the structure has focused on the symptoms (technology, order books etc.) rather than the cause. Ten years ago the bond ma…"
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US Corporate Bond Market: What Year Is It? – ViableMkts

Voodoo3July 8, 2016"(One of many) definition(s) of modernise: to adapt (something) to modern needs or habits, typically by installing modern equipment or adopting modern ideas or methods. There is always this pecking order of modern/cutting edge vs. ol…"
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BlackRock to Push Wall Street Chat Tool – 4 Traders

IcemanJuly 2, 2016"As has been discussed a number of times a chat function itself is hardly ground breaking so Symphony needs to continue to develop their platform and adopt new features and functions that appeal to a broader cross section of the comm…"
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BlackRock to Push Wall Street Chat Tool – 4 Traders

WolfmanJuly 1, 2016"So, most people will admit that 95% of what they use Bloomberg for is chat. If the BlackRock gorilla decides it will no longer permit their employees from chatting on Bloomberg, then the tide will have to shift. That's the bottom li…"
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BlackRock to Push Wall Street Chat Tool – 4 Traders

GooseJuly 1, 2016"It’s not like Symphony is just a functionality release or two ahead of a similar technology and business model. There is a huge gulf between the technology, models, and delivery of Symphony and Bloomberg.. This is an inflection poin…"
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BlackRock to Push Wall Street Chat Tool – 4 Traders

CougarJuly 1, 2016"A year ago I was Synphony skeptic. Not now. The seeming slow spread of the system belies the reality. In many sellside firms and now some of the buyside it has replaced the internal messaging system(s). The uniformity of this change…"
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BlackRock to Push Wall Street Chat Tool – 4 Traders

JesterJuly 1, 2016"There has been a pretty consistent theme from my fellow 10,000 Hours teammates when it comes to innovation in the corporate bond market and that is: If the buy side mobilizes, it will happen. As this article indicate, BlackRock appe…"
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Over Half of Buy Siders to Re-Evaluate Fixed Income Brokers – The Trade

MerlinJune 24, 2016"Don't buy side accounts review their dealer relationships at least annually already? Are they doing it differently or more aggressively this year??? And are 64% saying it is their TOP priority or just a top priority? It would seem t…"
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Over Half of Buy Siders to Re-Evaluate Fixed Income Brokers – The Trade

WolfmanJune 24, 2016"“Not surprisingly the focus is cost effectiveness, highlighting the on-going constraints buy-side actors are facing.” The dealer-to-client model is changing and new solutions are necessary. I get it. What's unclear to me is which fo…"
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Buy Side Provides More Fixed Income Liquidity – Markets Media

MustangJune 20, 2016"I agree with all this-- you nailed it on the head. One more important point: Market Axess is offering a "free" pre-trade solution, wherein dealers put the interests of their buyside customers. Theoretically, they know which buyside…"
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Buy Side Provides More Fixed Income Liquidity – Markets Media

matlami2016June 19, 2016"""in the most liquid bonds, trading participants use ECNs for micro lots, RFQ for odd lots, and voice for round lots and blocks. These solutions, for the most part, solve for immediacy and exact size. The struggle is in the large bl…"
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Buy Side Provides More Fixed Income Liquidity – Markets Media

MerlinJune 19, 2016"Sorry, for being unclear. I should have said "...about 10% of MKTX global volume".…"
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Buy Side Provides More Fixed Income Liquidity – Markets Media

matlami2016June 19, 2016""in the most liquid bonds, trading participants use ECNs for micro lots, RFQ for odd lots, and voice for round lots and blocks. These solutions, for the most part, solve for immediacy and exact size. The struggle is in the large blo…"
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Buy Side Provides More Fixed Income Liquidity – Markets Media

matlami2016June 19, 2016"Good points all ... the market structure is in an unstable equilibrium .. but maybe market structures are always thus? One clarification question .. "600mm/day is about 10% of global volume" - that would put global volume at $6B ...…"
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Buy Side Provides More Fixed Income Liquidity – Markets Media

JesterJune 18, 2016"Excellent click bait Markets Media (slow clap). Congrats to MarketAxess, they deserve tremendous credit for reviving their European business after very poor decisions nearly drove them into obscurity. Now how much market share do th…"
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Buy Side Provides More Fixed Income Liquidity – Markets Media

GooseJune 17, 2016"For the majority of my thoughts I will simply tip my hat to Hollywood. It is amazing watching it happen. Merlin, you are right, “Dealers have benefitted from being able to anonymously seek liquidity as they transform their businesse…"
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Buy Side Provides More Fixed Income Liquidity – Markets Media

WolfmanJune 17, 2016"Love it!…"
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Buy Side Provides More Fixed Income Liquidity – Markets Media

HollywoodJune 17, 2016"I agree with Merlin – Dealers are absolutely choking on MKTX fees. Dealers’ FI opportunity has decreased, however, their MKTX fees have not changed with the times. For IG, most dealers pay a very high fixed fee. MKTX also marks up o…"
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Buy Side Provides More Fixed Income Liquidity – Markets Media

WolfmanJune 17, 2016"If I've learned any single truth, it is that people will act in their own self-interest. That goes for people defined as individuals, families, corporations, banks, governments and on and on. These new technologies are introducing n…"
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Buy Side Provides More Fixed Income Liquidity – Markets Media

HollywoodJune 17, 2016"Private Axes sounds like Liquidnet: Dark pool. Articles have quoted Liquidnet averaging roughly $45MM a day in trade volume. Given the market structure of the corporate bond market, a dark pool is perhaps the last trading tool one w…"
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Buy Side Provides More Fixed Income Liquidity – Markets Media

Terence & PhillipJune 17, 2016"I'm a fan of Open Trading in the sense that MKTX took an early view and were not afraid to just about back every protocol going to make sure they had the right one. They were not afraid to back a few losers to make sure they got som…"
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Buy Side Provides More Fixed Income Liquidity – Markets Media

MerlinJune 17, 2016"I think MKTX is doing a remarkable job of maintaining its dominance in the N.A. credit space while trying to take market share in Europe (unclear to me that it has). And I applaud all of the efforts with their All to All trading eff…"
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James Switzer (Alliance Bernstein) On Taking Control – The Desk

MerlinJune 12, 2016"Nice piece by The Desk in helping to get the word out. Jim and team have been speaking about Alfa for 6+ months now at various conferences and people seem to finally be taking notice. For me, the most important part of what I can as…"
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James Switzer (Alliance Bernstein) On Taking Control – The Desk

GooseJune 11, 2016"Excellent article on concrete MEANINGFUL changes taking place in the markets. AB's efforts tie into a similar thought thread from last week. As the wall comes down and the buy side can aggregate the multiple marketplaces, the same l…"
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James Switzer (Alliance Bernstein) On Taking Control – The Desk

JesterJune 10, 2016"This was a great piece in that it set an example for what must be done for the buy side to take the next step in fixed income. Here are the things that particularly caught my attention: 1) Alliance looks globally for dollar bond liq…"
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James Switzer (Alliance Bernstein) On Taking Control – The Desk

MustangJune 10, 2016"A few things stand out: 1. AB is taking the initiative to build tools that help them find liquidity. They are not waiting on software providers, dealers or the market to "transform". Atta boy Jim! 2. Younger talent. One of the bigge…"
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James Switzer (Alliance Bernstein) On Taking Control – The Desk

WolfmanJune 10, 2016"The cover picture of Jim tells it all. Strong, determined and standing up for what he believes in. This article provides us all with keen insight into the changes that are taking place in the structure of the wholesale credit market…"
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Fixed Income Liquidity to be More Centralized – Markets Media

Voodoo3June 7, 2016"I think that Greyspark/Greyspark press department got the wrong end of the stick. It's the Markets Media lack of journalistic edge which makes the story for me.. But then again..…"
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Fixed Income Liquidity to be More Centralized – Markets Media

GooseJune 3, 2016"With the caveat that I didn’t buck up for the full report, a couple of thoughts. “..the fixed income industry is shifting from a principal-based business leaning on inventory and risk to an agency-to-agency model and the buyside-to-…"
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Fixed Income Liquidity to be More Centralized – Markets Media

WolfmanJune 3, 2016"Not having read the entire Greyspark paper and perhaps it’s covered there, but there seems to be a lot of talk as to the “how” and “what” people will trade, but not the “why”. Recent reports from the CME proudly state that Treasury…"
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Fixed Income Liquidity to be More Centralized – Markets Media

MustangJune 3, 2016""So, Greyspark has ended up at the same conclusion I’ve had for a while. Dealers need to quote fewer bonds and improve specialization. Days of being ‘master’ of 150 bonds is gone, it needs to be whittled down to 25-35 at most. Perve…"
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Fixed Income Liquidity to be More Centralized – Markets Media

MerlinJune 3, 2016"Charlie and Cougar, did you read the same article I did or did you give your passwords to someone else this week? Ok, I haven't read the report so can only base comments on what Markets Media says Greyspark is stating. Let's start w…"
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Fixed Income Liquidity to be More Centralized – Markets Media

CougarJune 3, 2016"I liked this article and found nothing I would disagree with. However it did make me think about one of the phrases. To recap, regulation is forcing change to market structure and workflow while the banks are clinging to the past. W…"
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Fixed Income Liquidity to be More Centralized – Markets Media

CharlieJune 3, 2016"I did find one clause in the article which made sense to me; "the corporate credit market in particular is attempting to continue to eek profitability from a market structure that is increasingly not fit-for-purpose,". The prolifera…"
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Time for the Market to Rethink Liquidity – Investor Daily

WolfmanMay 26, 2016"Right on, Jester! This is required reading and hits all of the key points. Fixed Income ain't equities and the current product offering doesn't mimic retail-designed equity products. Yes, I know, ETFs can fit the bill, but they are…"
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Time for the Market to Rethink Liquidity – Investor Daily

JesterMay 26, 2016"This article is REQUIRED READING for market participants. Why? It discusses the problem of liquidity without perception bias and admits the real challenges behind potential solutions. For example: “Electronic systems may make tradin…"
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Time for the Market to Rethink Liquidity – Investor Daily

HollywoodMay 26, 2016"The article lists many suggestions as to how the bond market will evolve and what can be done to mitigate lack of liquidity. Blackrock and others have proposed changes to market structure to improve liquidity. Nobody, however, is di…"
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Tradeweb Pushes New Credit Trading Model in Europe – eFinancial News

HollywoodMay 21, 2016"Yes, Stinger – tough crowd. Some facts: Blast RFQ creates noise. Dealers get thousands upon thousands of RFQs per day. It is impossible to keep up so, many dealers don’t pay attention. Average Dealer time-outs can exceed 80%. If a T…"
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Tradeweb Pushes New Credit Trading Model in Europe – eFinancial News

IcemanMay 21, 2016"Perhaps TW should look at rolling out the dealer-sweep protocol of matching at mid for <=1mm with a follow on if required to the Buy-Side and see what happens. Or maybe some dealers are already putting Buy-Side flow into it so th…"
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Tradeweb Pushes New Credit Trading Model in Europe – eFinancial News

StingerMay 20, 2016"Tough crowd in here. I'm with Merlin, I perceive that Tradeweb is understandably trying to be slightly different/creative while catering to their ownership. Their mandate is to break the monopoly that dealers now have to contend wit…"
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Tradeweb Pushes New Credit Trading Model in Europe – eFinancial News

MerlinMay 20, 2016"OK, I get all of you. But unclear that poking fun is necessary here. Yes, TradeWeb could release its own version of "Open Trading" (amazing that 'all to all' has morphed into "open trading" just because MKTX CEO didn't want to antag…"
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Tradeweb Pushes New Credit Trading Model in Europe – eFinancial News

MustangMay 20, 2016"While an improvement, why not go further? Why is there a cat and mouse game of the largest players in the space and publicly marketing these small improvements? Seems like a slight differentiation from MA. If it gains some slight ad…"
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Tradeweb Pushes New Credit Trading Model in Europe – eFinancial News

GooseMay 20, 2016"Guess who drives the bus at TradeWeb? Hasn't MKTX already debunked some of these theories with their vocal all to all push? There is no value to information slippage in the blasting out thousands of odd lot time sensitive RFQ lists…"
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Tradeweb Pushes New Credit Trading Model in Europe – eFinancial News

JesterMay 20, 2016"(Highly plausible transcript of Tradeweb meeting with a dealer to discuss the impending launch of FlexRFQ) Tradeweb (after walking the dealer through the protocol): “Sooooo, what do you think?” Dealer: “You mean we get to see a requ…"
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Tradeweb Pushes New Credit Trading Model in Europe – eFinancial News

WolfmanMay 20, 2016"This certainly isn't groundbreaking and it reflects the ownership of TW. Let's see, I didn't get the quote I wanted so now I go to the second-string? If the dealers are the only source of liquidity, is it a given that someone is jus…"
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Tradeweb Pushes New Credit Trading Model in Europe – eFinancial News

IcemanMay 20, 2016"Hate to break the bad news but this is not ground breaking. If anything it is an attempt to follow MAX with open trading but given their ownership structure not go to far away from the existing market structure...... until they have…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

MustangMay 18, 2016"I wonder what Neptune thinks of all the software providers in the space. Are they looking to just be a free utility or are there aspirations to do something interesting with the data? Or will this be up to dealers and buyside to bui…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

MerlinMay 18, 2016"Why is there so much "comparison" of Algomi and Neptune? They do very different things. Algomi's Synchronicity is a pre-trade workflow tool to help sell side corporate bond salespeople and traders identify and prioritize axes to wor…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

CelticBondMay 16, 2016"Neptune requires someone to pay for the build as Etrading Software themselves cannot afford this. So as such a utility that will struggle as they did with their IRS translator. There are so many free models already out there why wou…"
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FCA Urged to Review Bloomberg Bond (Trading) Rejections – The Trade

SliderMay 15, 2016"It is still a shock to me that after all the discussion surrounding this topic, including a plethora of news articles, numerous long conference panel discussion on Fixed Income market structure, and some rather deep analytical dives…"
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FCA Urged to Review Bloomberg Bond (Trading) Rejections – The Trade

GooseMay 13, 2016"A lot of insightful commentary here already. My thinking pretty much follows the line of Mustang’s. Information fragmentation for market makers (you can’t even easily aggregate ATS’ markets, then throw in heterogeneous chat and mess…"
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FCA Urged to Review Bloomberg Bond (Trading) Rejections – The Trade

MustangMay 13, 2016"This post hits it on the head. BBG is only the ultimate liquidity solution if you only look at them. They SHOULD be regulated. They have a network. They should be leasing that network and clipping a fee. They are fighting a shrinkin…"
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FCA Urged to Review Bloomberg Bond (Trading) Rejections – The Trade

Tried and failed.May 13, 2016"This will make you laugh. Six years ago I developed software that enabled buy-side clients to send my trading firm live, executable bids and offers that went onto ALLQ in the name of my trading firm, protecting their identity. This…"
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FCA Urged to Review Bloomberg Bond (Trading) Rejections – The Trade

Michael30May 13, 2016"I can only hope that the European regulators take the time to truly understand the dynamics of all OTC markets before making any rash judgments. In the US, we saw all too well how often the swap market was aligned to futures and the…"
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FCA Urged to Review Bloomberg Bond (Trading) Rejections – The Trade

MerlinMay 13, 2016"I am late to the party but as others have referred to, this has been an issue for years. I like to break things into 'quoted price', 'live price' and 'quasi live price. Quote and live are obvious, quasi live is where the problem lie…"
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FCA Urged to Review Bloomberg Bond (Trading) Rejections – The Trade

JackMay 13, 2016"Part of the problem is Bloomberg’s regulatory arbitrage. It acts as a market, it is perceived as a market, but it is not regulated as a market – thus no accountability on firmness of prices and the corresponding phantom liquidity. A…"
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FCA Urged to Review Bloomberg Bond (Trading) Rejections – The Trade

Tried and failed.May 13, 2016"Sadly you quickly discover that large organisations like regulators and central banks do not share information internally. It explains a lot.…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

MerlinMay 13, 2016"Neptune is way cheaper for dealers to participate with and is much more aligned with how they wish to continue to run their business. There has been little friction with Neptune's model and the community. Algomi on the other hand...…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

IcemanMay 13, 2016"Neptune is free at the moment for the Buy-Side but the model is to have the Buy-Side pay a nominal fee for the data (£16k) for the global entity starting in July I believe. For dealers it is £79k for the global entity across global…"
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FCA Urged to Review Bloomberg Bond (Trading) Rejections – The Trade

CelticBondMay 13, 2016"Hilarious that the BoE says there is no liquidity issue when with all these independent initiatives none need to seek BoE or FCA endorsement or explain what they are trying to do. Regulators spend such little time with market people…"
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FCA Urged to Review Bloomberg Bond (Trading) Rejections – The Trade

Tried and failed.May 13, 2016"No surprise that the FCA is unaware of this practice of indicative price posting to obtain order flow information from the buy-side without committing any capital. Furthermore the Bank of England recently published a report claiming…"
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FCA Urged to Review Bloomberg Bond (Trading) Rejections – The Trade

Voodoo3May 13, 2016"I can't believe the regulators were truly surprised. As rightly pointed out Bloomberg gets away with not being regulated but indicative prices are also the norm on other B2C platforms... By the way the image of the empty pool is cut…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

CelticBondMay 13, 2016"So in Europe there is Neptune which again for free & many big buysides have signed to along with Algomi too. Whats common amongst these is that free does not mean any commitment especially when there is no live delivery.…"
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FCA Urged to Review Bloomberg Bond (Trading) Rejections – The Trade

CelticBondMay 13, 2016"What the pages of the platforms covering Credit, emerging & other illiquid debt do not state which would be helpful is that 'The prices represented on this page / platform are purely indicative of where the (said) dealer / s bel…"
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FCA Urged to Review Bloomberg Bond (Trading) Rejections – The Trade

CougarMay 13, 2016"Screen prices are not valid. The publication of invalid prices directly harms the functioning of the market because positions are marked too high and so NAVs also wrong. Having to trade a block of bonds 5-20bps back from where you a…"
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FCA Urged to Review Bloomberg Bond (Trading) Rejections – The Trade

BorisMay 13, 2016"All empirical evidence suggests the credit markets are functioning well and regulators across the globe report no major issues with liquidity: – new issues continue print record numbers yoy – spreads continue to grind tighter http:/…"
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FCA Urged to Review Bloomberg Bond (Trading) Rejections – The Trade

IcemanMay 13, 2016"Europe's biggest issue is the belief that screens work and that the tight prices that get dealers on an RFQ to see the flow are firm. Screens don't work and have not for many years, prices are tight to get the look but it does not m…"
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FCA Urged to Review Bloomberg Bond (Trading) Rejections – The Trade

HollywoodMay 12, 2016"The corporate bond market is too fractured (36,000 CUSIPs in the US) and also lacks the liquidity to trade on continuous live prices. Half of the European corporate bond trades are done electronically. 80% of the electronic trading…"
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FCA Urged to Review Bloomberg Bond (Trading) Rejections – The Trade

MustangMay 12, 2016"I am shocked that they are shocked. This behavior is as old as electronic trading platforms in FI. This really comes down to an information problem related to both technology & information disadvantage: Technology. Participants…"
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FCA Urged to Review Bloomberg Bond (Trading) Rejections – The Trade

WolfmanMay 12, 2016"This article should serve as a siren call to regulators who believe that all markets can behave in a similar matter. More importantly, it makes reading the Friday Newsletter mandatory for anyone in the fixed income markets. The cura…"
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Identifying Certainty in an Uncertain Fixed Income World – Bloomberg Trading Solutions

JesterMay 7, 2016"We all know that this article is a commercial, so I will cut the authors some slack regarding the facts of their case. I do wonder if they laughed to themselves when they wrote: “Change will continue to come in unexpected forms and…"
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Identifying Certainty in an Uncertain Fixed Income World – Bloomberg Trading Solutions

Prop TraderMay 6, 2016"Charlie, should you be posting here if you don't understand? Please be honest. You are so off on your analysis. "Immediate access to 650 institutions and 3000 traders"-->THAT IS NOT TRUE FOR ANY TRADER. The terminal represents LE…"
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Identifying Certainty in an Uncertain Fixed Income World – Bloomberg Trading Solutions

CharlieMay 6, 2016"Its all about the network! Although in this product offering simply the number of venues that a user can access? Could a stand alone company offering wide access be just as attractive? As I understand it BBG charges extra for this t…"
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Identifying Certainty in an Uncertain Fixed Income World – Bloomberg Trading Solutions

MustangMay 6, 2016"Exactly! If BBG truly connected to all venues then this would be a monumental shift. BBG does a lot of things. Many of them not well, largely because there's no incentive for them. However, they have the most vast network in a marke…"
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Identifying Certainty in an Uncertain Fixed Income World – Bloomberg Trading Solutions

MerlinMay 6, 2016"Just pointing out that this ‘article’ is clearly written by Bloombergs Trading Solutions Group where TOMS as well as AIM is run out of. Therefore think we should be viewing it as marketing/advertising vs. an 'article'. Doesn't mean…"
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Identifying Certainty in an Uncertain Fixed Income World – Bloomberg Trading Solutions

MerlinMay 6, 2016"Just pointing out that this 'article' is co-authored by Ray Tierney, who heads up their Trading Solutions Group. Also think this was released on their blog so don't think we can use this as an example of "..blurred boundaries betwee…"
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Identifying Certainty in an Uncertain Fixed Income World – Bloomberg Trading Solutions

WolfmanMay 6, 2016"Bloomberg is losing subscribers as the industry continues to consolidate and they are doing what they should be doing - leveraging their assets. While we can all sit back and judge the ever-blurred boundaries between their journalis…"
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Identifying Certainty in an Uncertain Fixed Income World – Bloomberg Trading Solutions

CelticBondMay 6, 2016"Average journalism with shameless advertisement for AIM which is not all things to all people. Buysides are looking for more lightweight solutions away from desktop focus…"
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Identifying Certainty in an Uncertain Fixed Income World – Bloomberg Trading Solutions

GooseMay 5, 2016"“Things That Make You Go Hmmmm….” –C&C Music Factory (featuring Freedom Williams) “Traders and their institutions have to make thoughtful decisions on partners to make sure that they have assured access (connectivity) to the ven…"
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Identifying Certainty in an Uncertain Fixed Income World – Bloomberg Trading Solutions

MerlinMay 5, 2016"A marketing piece for Bloomberg AIM. Not their usual selling MO but a nice effort. And there is a lot to be said of connecting 3000 traders across 650 firms but my guess is that TradeWeb and maybe even MarketAxess are large enough e…"
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Identifying Certainty in an Uncertain Fixed Income World – Bloomberg Trading Solutions

CharlieMay 5, 2016"Were I to be starting a fixed income trading platform today, or any sort of new fixed income service the first call I would make would be BBG. Immediate access to 650 institutions and 3000 traders. I am never going to be able to per…"
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Electronic Bond Trading Platforms Seek to Attract Larger Orders – Bloomberg

CelticBondMay 5, 2016"In Europe the Govt eTrading orders are significantly down for the last 5+ years. All in Euroland claim that their volumes with the smaller orders are picking up this gap which I doubt. Also many are saying volumes n their IRS platfo…"
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This Might Be the Biggest Problem With the ECB’s Plan to Buy Corporate Bond Debt – Bloomberg

CelticBondMay 5, 2016"Funny when BUBA did this for Covered Bonds all hailed this initiative alas BUBA struggled to find secondary market liquidity, pricing & thus struggled to achieve what they set out to help. THey approached several platforms to ge…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

CelticBondMay 5, 2016"THis was a well funded start up. What I see with ALgomi is that it is rarely out of the news or up for any award going. The idea is good but the delivery has been criticised whenever I ask people about them. No a FI platform is not…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

CelticBondMay 5, 2016"The focus strayed from Euro clients but still the PR machine is being cranked out at a high rate. Is there an award going they have not won? I like the idea of what Algomi is doing, BUT this needs a lot of money & more dealer bu…"
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This Might Be the Biggest Problem With the ECB’s Plan to Buy Corporate Bond Debt – Bloomberg

MustangMay 1, 2016"This very much resonates with me. Not only has their intentions to buy rendered fundamental credit analysis useless, but their intentions to potentially be the largest seller in a given issue equally exacerbates the issue. One one h…"
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This Might Be the Biggest Problem With the ECB’s Plan to Buy Corporate Bond Debt – Bloomberg

JesterMay 1, 2016"This article does a solid job of pointing out a few of the potential issues that ECB corporate bond buying could cause, but there is so much more to discuss if we look at the actual problems that these policies have generated. The s…"
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This Might Be the Biggest Problem With the ECB’s Plan to Buy Corporate Bond Debt – Bloomberg

MerlinApril 29, 2016"Good comments as always guys/gals. The ECB is going to be paying through the nose for overpriced assets since it has told everyone that it is going to buy these (information leakage 101) and unless they hold them to maturity, good l…"
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This Might Be the Biggest Problem With the ECB’s Plan to Buy Corporate Bond Debt – Bloomberg

MustangApril 29, 2016"At some point, the music will stop. Central bankers will need to stop kicking the can down the line. While the ECB *could* buy up to 70%, I'd bet that they will only do so if absolutely necessary. Things will need to deteriorate mat…"
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This Might Be the Biggest Problem With the ECB’s Plan to Buy Corporate Bond Debt – Bloomberg

CougarApril 29, 2016"There is no one to buy if the ECB sells. This was my point. Beyond the moral hazard of printing money to buy corporates no one else can compete.…"
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This Might Be the Biggest Problem With the ECB’s Plan to Buy Corporate Bond Debt – Bloomberg

IcemanApril 29, 2016"Wolfman nailed it......'we will do whatever is necessary' is a pretty bold statement and when it was first made the market felt safe. A few years on and it just sounds like the best known quote of a fading movie star. I wonder what…"
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This Might Be the Biggest Problem With the ECB’s Plan to Buy Corporate Bond Debt – Bloomberg

WolfmanApril 28, 2016""Those very rating agencies that were hammered for not being impartial in the subprime and Lehman crises. So now the biggest bank of them all has put its own balance sheet at risk in the most incredible way, jumping into bed with th…"
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This Might Be the Biggest Problem With the ECB’s Plan to Buy Corporate Bond Debt – Bloomberg

CougarApril 28, 2016"The ECB is now printing money to fund corporates, with its simultaneous QE and corporate bond purchases. This is intellectually and morally bankrupt but the corollary of 8 years of Western central bank policy. The article's points a…"
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OpenBondX E-Trading Platform Introduces New Rebate Fee Structure for Fixed Income Trading – PR Newswire

GooseApril 22, 2016"Interesting question. I know they have solved for this in the equity market. FNL community know how that functions?…"
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OpenBondX E-Trading Platform Introduces New Rebate Fee Structure for Fixed Income Trading – PR Newswire

GooseApril 22, 2016"Cougar that is a great point on Heisenberg. I had not thought of it that way. Thanks.…"
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OpenBondX E-Trading Platform Introduces New Rebate Fee Structure for Fixed Income Trading – PR Newswire

IcemanApril 22, 2016"Given the focus on regulation (TCA/Best Ex) and ensuring the end client is getting a fair deal not sure how this works in that world for an Asset Manager / WM. To Voodoo3's point if the rebate hits the traders pnl and not the end cl…"
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OpenBondX E-Trading Platform Introduces New Rebate Fee Structure for Fixed Income Trading – PR Newswire

CougarApril 22, 2016"I really like this model as it solved the game theory and effects akin to the Heisenberg uncertainty principal. As Charlie mentioned the initiator/price taker must know where the bonds are trading as when they enter their price it c…"
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OpenBondX E-Trading Platform Introduces New Rebate Fee Structure for Fixed Income Trading – PR Newswire

CharlieApril 22, 2016"An ingenious twist where the ‘taker’ of liquidity gets paid! Actually, initiators in this model are not your traditional price taker as they are required to put in an undisclosed price at which they are willing to deal. Presumably t…"
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OpenBondX E-Trading Platform Introduces New Rebate Fee Structure for Fixed Income Trading – PR Newswire

MerlinApril 21, 2016"I have been involved in marketing a number of platforms over the years and made sure I was braced for the reaction when the question came regarding cost and the answer was always 'similar to today's IDB fees'. The majority of the ti…"
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OpenBondX E-Trading Platform Introduces New Rebate Fee Structure for Fixed Income Trading – PR Newswire

WolfmanApril 21, 2016"Captain Obvious here. Market share relies heavily on the ability to get a trade done and it must reach critical mass/tipping point where if begins to grow organically. Getting people to stay with the platform day after day of not ge…"
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OpenBondX E-Trading Platform Introduces New Rebate Fee Structure for Fixed Income Trading – PR Newswire

GooseApril 21, 2016"The etrading plot thickens. The OpenBondX HY offering represents several material changes to the fixed income “open trading” electronic execution space. The protocol makes a lot of sense for HY buy and sell side vs. RFQ spray, but I…"
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OpenBondX E-Trading Platform Introduces New Rebate Fee Structure for Fixed Income Trading – PR Newswire

Voodoo3April 21, 2016"Philosophically this fee model is right and both takers and makers (should) like it. It's fair. It's a good tool to attract existing liquidity from another platform to a new platform if... fees are a sensitive topic AND if the rebat…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

MerlinApril 17, 2016"Wow, this is amazing. Think the FNL hit a nerve with this one? Obviously a lot of pent up opinions about Algomi. So many good and bad ones I don't know where to start! So just a few... Algomi found themselves in a difficult position…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

GooseApril 16, 2016"Does the FNL community have any clarity on what "170 buy side clients" means? Is it just signed paperwork, are they just connected in production to Honeycomb, are 170 clients interacting with the dealers that are in production on th…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

MustangApril 16, 2016"If Algomi starts getting product right in a time horizon short enough to fund themselves, there is no doubt that they will be the 800lb gorilla in the space. They are by far, taking the most risks and connecting many dots that have…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

CougarApril 15, 2016"All my experience points to one thing. Concentrate down and focus hard on one objective: getting my clients to do more trades with me (a sell-side, salesperson). Drop the advisors, cut the workforce to 30% and concentrate on that si…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

Voodoo3April 15, 2016"Sorry, bit these are not issues that arose since Algomi launched but well before. One thing for a start-up, is getting unlucky somewhere along the way (market conditions, regulatory changes, delays) another is fleeing forward and ho…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

Voodoo3April 15, 2016"Algomi are engaged in a race against time: build a big enough network of buy side participants -worth something/a lot to someone- versus burning all their capital/credibility. Initially there seemed to be a business plan and every y…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

CougarApril 15, 2016"I can think of few such regulated industries. We have less regulation than medicine or nuclear power where the regulator must sanction each provider as well as the specific reulations. That said to get 20+ 'yeses' internally and sen…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

MustangApril 15, 2016"Cougar: Compliance is definitely a barrier, but the same could be said of any regulated market. Still seems like we are much further behind the curve in FI and the approach is different in those as well.…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

CougarApril 15, 2016"The vested interests both deliberate and unintended, such as compliance creates such a large barrier to entry in capital markets, that it is hard to compare our industry to typical start-ups. So what will it take for profitability?…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

Tried and failed.April 15, 2016"You may have revealed a conflicted revenue model as well. Like I said before, all of this is solvable and algomi has no shortage of smart people.…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

MustangApril 15, 2016"Thanks, T&F. I understand the numbers and potential value but all-to-all, while potentially beneficial, comes with some risks: 1. Shooting yourself in the foot with dealers. MA can do this because they already have dealers behol…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

Tried and failed.April 15, 2016"Algomi has invested time, effort and capital into connecting up 170 buy-sides. Buy-sides have abundant bid and offer liquidity all day every day in all types of bonds. Confining the workflow to hoping that a dealer will glow on the…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

MustangApril 15, 2016"You are correct in that it's not surprising that a startup is operating at a net loss. It is, however, interesting and newsworthy that a startup is operating at such a large loss without having figured a lot of things out. In other…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

MustangApril 15, 2016"Hi T&F-- Why is a lack of all-to-all a gap? This creates a heavier lift as it changes market structure and is predicated on a large network. It also remains to be seen whether all-to-all will actually have value in the market ou…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

MustangApril 15, 2016"I have a lot of respect for the Algomi team. There are some very talented people working on a very difficult task. I’d argue that enormous funding is the root of their issues and not the solution. Losses are large because they are n…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

krogersApril 15, 2016"Noting that a startup is operating at a net loss is neither surprising nor newsworthy. Algomi faces challenges in convincing a deeply traditionally-minded industry to accept broad changes in its business model, but there is an inevi…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

Tried and failed.April 15, 2016"Fixed Income really is not a VC environment. The time frames are too long, client acquisition cost is too high and revenues are scarce until an unknown critical mass is achieved. The dominant existing platforms are or were all owned…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

CougarApril 15, 2016"Never underestimate VCs' inability to understand capital markets. I suspect Algomi must show clear signs of consistent adoption/turnover/other metric for VC support else it's strategic investors. It's very sad the barriers of entry…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

MerlinApril 15, 2016"Exactly Goose. There were actually two pivots, first a trading execution platform networking dealers through the Swiss stock exchange, then Synchronicity for a dealer workflow tool, followed by Honeycomb a networking/dissemination t…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

Tried and failed.April 15, 2016"It is very easy to criticise the efforts of pioneering firms like algomi and to underestimate the complexity and difficulty involved in reaching a successful outcome in this market. Algomi has been very successful in many aspects, b…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

MerlinApril 15, 2016"It doesn't matter that they get disclosed dealer trades (and more) via their technology connections if they don't have a critical mass of dealers providing that information. They clearly have not figured out the right model yet or w…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

GooseApril 15, 2016"Algomi’s products have great technology, functionality, intuitive userface,….so what seems to be the problem? The problem isn’t marketplace technology, just look at what is available in other markets. It seems to me that the hurdles…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

StingerApril 15, 2016"Hi Viper, funny enough it IS Algomi's model to get actual disclosed dealer trades - they connect to the dealer booking system and don't really let them paint pictures aside from their actual activity. So they got that part right. As…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

WolfmanApril 15, 2016"Help me here. I know great ideas may take time to demonstrate viability, but what exactly is the business model? Is the plan to charge an execution fee, so you pay as you go? Or is it a subscription fee which will be added to the ev…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

ViperApril 15, 2016"Algomi's marketing has bern, as has been stated, phenomenal. The awards shelf in their office must also be overflowing. But, stateside at least, I always the premise was flawed. Dealers thrive on "looking" like they are involved and…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

CougarApril 15, 2016"Looking at the Algomi accounts lodged at Companies House it seems they lost £14MM up to June 2015 (P&L account). A further £9MM loss if for post-June 2015 and that’s £23MM of cash. Does Algomi make sense as a product? Definitely. As…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

MerlinApril 15, 2016"Don't think anyone is surprised that they are burning a lot of money. It has always been a mystery as to where/how they are generating revenue. While their marketing and PR has been PHENOMENAL, their business execution has been weak…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

HollywoodApril 15, 2016"A buy-side product is more scalable then a sell-side product for Algomi. This is because many dealers already have order / inquiry matching solutions (built in-house or from Algomi competitors such as Code Street, Xios, Bloomberg, e…"
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Losses Mount at Fixed Income Startup Algomi – Financial News

CharlieApril 15, 2016"Feel the Bern! (with apologies to the Sanders campaign). Establishment of a networked market is notoriously difficult, the value comes once there is a large number of participants. Algomi simply isn't there yet, even with 170 firms…"
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The Difference Between Price Makers and Market Makers – Greenwich Associates Blog

CharlieApril 8, 2016"Another well researched and thought provoking article from Kevin McPartland and Greenwich. How deep does the 'planning to do so' (make prices) actually go? Are firms speaking from frustration with the status quo and making threats o…"
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The Difference Between Price Makers and Market Makers – Greenwich Associates Blog

GooseApril 8, 2016"Nice work by GA, in that it begins to address what you can likely expect from the buy side in regards to additional liquidity. Given the role of the buy side, their incentives, and mandates…..the answer seems to be “some”, but not m…"
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The Difference Between Price Makers and Market Makers – Greenwich Associates Blog

MerlinApril 8, 2016"The most interesting finding in the Greenwich report to me is that more accounts now think they can be liquidity providers after ignoring the situation for the last 3-5 years. And Greenwich does a good job of clarifying what they be…"
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The Difference Between Price Makers and Market Makers – Greenwich Associates Blog

CougarApril 7, 2016"This is a sound well researched article. Marking-making is akin to insurance. If premiums are paid the donwsides will be covered when it goes wrong. If you skimp on the premiums you'll have nothing to run when the house burns down.…"
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The Difference Between Price Makers and Market Makers – Greenwich Associates Blog

StingerApril 7, 2016"Thank you to Greenwich for the timely research and blog post here. I think that the noise around this issue obscures the simple reality: who benefits from what? I refer below to the pure argument only, of the buyside becoming dealer…"
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The Difference Between Price Makers and Market Makers – Greenwich Associates Blog

MustangApril 7, 2016"Good report. Some comments: Paying for liquidity: I agree that liquidity will return when dealers are appropriately paid for providing it. While low rates, huge primary issuance and largely one-directional flows from investors exace…"
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US Companies Overpaying for Bonds; Banks May Be to Blame – Reuters

MerlinApril 6, 2016"Cougar, I would agree with you if this were an actual underwriting process like in the old days where if you priced the deal wrong.... But for a long time now pretty much all deals are negotiated. Syndicate desks are order takers ju…"
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US Companies Overpaying for Bonds; Banks May Be to Blame – Reuters

CougarApril 2, 2016"I traded off-the-run secondary markets and judging the spread premium for the illiquid was a definite skill, all while in competition. I wasn't getting paid by anyone so not only do I rarely sympathize with banks but even rarer do I…"
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US Companies Overpaying for Bonds; Banks May Be to Blame – Reuters

MustangApril 2, 2016"I don't think it's necessarily difficult to price these issues. Clearly an AAPL or MSFT first issuance is much different than say, a $100MM low triple B infrequent issuer with some structure. With the latter, there is more pricing r…"
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US Companies Overpaying for Bonds; Banks May Be to Blame – Reuters

MerlinApril 2, 2016"You guys/gals are making me laugh defending the banks by arguing how much harder it is to price infrequent issuers so the 'concession' must be greater. How hard do you think is was to price Microsoft's or Apple's first issuance? One…"
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US Companies Overpaying for Bonds; Banks May Be to Blame – Reuters

MustangApril 2, 2016"Not really surprised by this. As noted prior, less frequently traded names have more risk to price correctly and are likely priced cheaper. Bank names have more data points to price, so less pricing risk. At the same time as there a…"
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US Companies Overpaying for Bonds; Banks May Be to Blame – Reuters

WolfmanApril 1, 2016""But when they do their own bonds, they seem to know exactly where to price them." REALLY? Has Fideres done a robust analysis of the quality of the issuer and the frequency with which the particular issuer comes to market? Are they…"
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US Companies Overpaying for Bonds; Banks May Be to Blame – Reuters

JesterApril 1, 2016"100% agree with you that you can not eliminate the post-issuance rally. People like shiny new things in this market. My point is not that the article focuses on the wrong issue in the market. It is not the pop, it is who gets the bo…"
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US Companies Overpaying for Bonds; Banks May Be to Blame – Reuters

GooseApril 1, 2016"This seems a pretty big leap to blame bankers, given all the variables in the new issue market for corporates. My thought line runs similarly to other comments. Non Frequent issuers coming into an OTC market with few comps to look a…"
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US Companies Overpaying for Bonds; Banks May Be to Blame – Reuters

CougarApril 1, 2016"For sure Jester the (large) buyside benefits most from this process. However, it could never be the case that there would be no post-issuance rally. The real issue is that most corporates are non-frequent borrowers where the risk of…"
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US Companies Overpaying for Bonds; Banks May Be to Blame – Reuters

CougarApril 1, 2016"I'd also add it would be interesting to see the definition of the post-issuance secondary price. Is it a screen secondary bid mirage valiation in 250K or is it actually where 5MM to 10MM blocks trades? While it affects both financia…"
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US Companies Overpaying for Bonds; Banks May Be to Blame – Reuters

JesterApril 1, 2016"For everyone who knows exactly how the new issue process “works” this accusation is not a shock. What is funny is the willful blindness present in the headline “Banks may be to blame”…..Really? Just the banks? Nobody else? If the mi…"
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US Companies Overpaying for Bonds; Banks May Be to Blame – Reuters

CougarApril 1, 2016"At first glance, the data makes the conclusion obvious. Corporate clients of banks are suffering at the hands of dealers. Experience suggests the picture is not so clear. Financial institutions are frequent borrowers. The number one…"
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Everyone is Worried About the Thing Markets Need Most, But They’re Not Asking the Right Questions – Business Insider

MustangMarch 26, 2016"Few comments: 1. Blackrock talking about a looming liquidity crisis makes them an outlier and may have put a stutter step in its' FI inflow. You don't hear many other buyside firms talking about the impending liquidity landmine. "He…"
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Everyone is Worried About the Thing Markets Need Most, But They’re Not Asking the Right Questions – Business Insider

JesterMarch 26, 2016"First of all, an article on recent statements on liquidity with no mention of Blackrock’s 180 degree turn on this topic?.....move on, nothing to see here. There is so much to say about this topic, but I am halfway through a bag of C…"
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Everyone is Worried About the Thing Markets Need Most, But They’re Not Asking the Right Questions – Business Insider

WolfmanMarch 25, 2016"Here's the thing: Most investors care about trading in size and trading when markets are moving dramatically. In both these key areas, markets appear to be in much worse shape. Can fixed income be sliced and diced into small pieces…"
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Everyone is Worried About the Thing Markets Need Most, But They’re Not Asking the Right Questions – Business Insider

GooseMarch 25, 2016"It's a closed market Friday, but the FNL is keeps on trucking. The emergence of huge new issue deals, and having TRACE as the only statistic for measurement has fed into the concept that the market liquidity is fine. Issue size and…"
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Everyone is Worried About the Thing Markets Need Most, But They’re Not Asking the Right Questions – Business Insider

MerlinMarch 25, 2016"Kudo's to Matt Turner for putting this in a nice simple matter of fact way and questioning why the differing opinions as opposed to arguing for one side or the other. Gives us an opportunity to do that! It is simple, the academics a…"
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Blackrock’s Richard Prager: The Liquidity Is Out There – Institutional Investor

Voodoo3March 22, 2016"‘Based on our own observations’ is the key to this paper. From there onwards there isn’t really much to add. It’s just an advert.…"
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Blackrock’s Richard Prager: The Liquidity Is Out There – Institutional Investor

JesterMarch 20, 2016"The punchline from this entire interview is: “based on our own observations” Yes, from a certain “observation” there is absolutely nothing wrong with the corporate bond market provided that: A) You are always a net buyer of bonds B)…"
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Blackrock’s Richard Prager: The Liquidity Is Out There – Institutional Investor

MustangMarch 20, 2016""We don't believe there is a liquidity crisis whatsoever": Of course not. Well at least not today anyways. Blackrock sees an outsized share of the inflows and is also able to soak up its inflows with an outsized portion of new issue…"
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Blackrock’s Richard Prager: The Liquidity Is Out There – Institutional Investor

GooseMarch 18, 2016"Interesting point on all to all volumes. With the benefit of regulated pre trade transparency and homogeneous securities, I think aggregate (30+) equity dark pool volumes check in around 15% of overall volume.…"
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Blackrock’s Richard Prager: The Liquidity Is Out There – Institutional Investor

MerlinMarch 18, 2016"Hold on. Take a look at one of the non-feature articles in this weeks newsletter: "BlackRock is betting on millennials to help fix the market's biggest weakness" http://www.businessinsider.com/blackrock-is-modernizing-with-electroni…"
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Blackrock’s Richard Prager: The Liquidity Is Out There – Institutional Investor

GooseMarch 18, 2016"Well, this certainly seems like a 180 vs. what we have heard from Blackrock the last few years!! “There’s more of a plumbing problem” and not a liquidity problem in the market. If you quadruple? the size of your hotel while still ti…"
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Blackrock’s Richard Prager: The Liquidity Is Out There – Institutional Investor

MerlinMarch 18, 2016"So here we have Blackrock telling us "Blackrock doesn't believe there is a liquidity problem whatsoever", points to the growth of the IG market as proof that there is plenty of capital available and that the corporate bond market's…"
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Blackrock’s Richard Prager: The Liquidity Is Out There – Institutional Investor

CougarMarch 18, 2016"When only 5% of a position can be sold in the secondary market, a month after primary subscription - through whatever methodology - the market is broken. Only a few years ago trading 50-100% of that position in secondary was the nor…"
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Blackrock’s Richard Prager: The Liquidity Is Out There – Institutional Investor

WolfmanMarch 18, 2016"Blackrock presents a clear and compelling explanation of the migration toward a new model of blending principal and agency trading for the dealers who have heretofore acted primarily as liquidity providers taking principal risk. Whi…"
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Blackrock’s Richard Prager: The Liquidity Is Out There – Institutional Investor

HollywoodMarch 18, 2016"Blackrock believes there is no liquidity problem "whatsoever". Then why all the white papers from Blackrock? Other key comments from this video: "When you look at the investment grade corporate market as a proxy of invest-able asset…"
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ICAP Unveils CrossTrade: A Solution on its New Buy Side Portal (TrueQuote) – Automated Trader

MerlinMarch 11, 2016"I don't really know what to say since all it tells me is that ICAP is launching a new product, CrossTrade, within its new buyside portal, TrueQuote, that is meant to be "a workflow efficiency tool which enables buy side customers to…"
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ICAP Unveils CrossTrade: A Solution on its New Buy Side Portal (TrueQuote) – Automated Trader

GooseMarch 11, 2016"I am late to the party, looks like all I can do is nod and expand a little the following points. -Is an independent benchmark enough to get buyside to trade? How much transparency does IDC give into their methodology, and how does u…"
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ICAP Unveils CrossTrade: A Solution on its New Buy Side Portal (TrueQuote) – Automated Trader

JesterMarch 11, 2016"Let me get this straight, after building a successful business helping dealers hedge risk and price liquidity, your strategy is to now partner with a vendor of an “independently determined” pricing service to help buy side clients t…"
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ICAP Unveils CrossTrade: A Solution on its New Buy Side Portal (TrueQuote) – Automated Trader

IcemanMarch 10, 2016"The IDC pricing piece is the most interesting for me. At what point are dealers going to stop giving away one of their biggest assets (their data) for free to firms whose only intention is to dis-intermediate them? ICAP crossing mec…"
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ICAP Unveils CrossTrade: A Solution on its New Buy Side Portal (TrueQuote) – Automated Trader

WolfmanMarch 10, 2016"I'm not sure if there's enough information here to opine on, but since ICAP left a lot to the imagination on their tightly controlled press release, it's open season. It seems odd that the announcement of a new offering creating val…"
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ICAP Unveils CrossTrade: A Solution on its New Buy Side Portal (TrueQuote) – Automated Trader

CharlieMarch 10, 2016"So ICAP is now describing itself as a 'provider of post trade mitigation and information services', and in the next breath ICAP announces it's launch of a trading platform for the buy-side utilizing someone else's information servic…"
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ICAP Unveils CrossTrade: A Solution on its New Buy Side Portal (TrueQuote) – Automated Trader

ZobMarch 10, 2016"Icap Global Broking? I am surprised that it is this part of the business (the Tullett JV part) that is initiating Icap's first real foray into the AM side of the Buyside crossing firmly into a space that its traditional dealer custo…"
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Tradeweb Acquires CodeStreet LLC – PR Newswire

MustangMarch 7, 2016"Another thing I don't understand: What sellside or buyside firm would disclose more info to a transaction platform? I could have sworn that I read something about information leakage being bad. Isn't TW just an idb with an electroni…"
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Tradeweb Acquires CodeStreet LLC – PR Newswire

RatMarch 4, 2016"Old tech meets old tech? Use of DealerPool could be interesting...however, innovation at Tradeweb has historically been applying RFQ to different products. Will governance allow something more innovative to happen? Not to mention th…"
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Tradeweb Acquires CodeStreet LLC – PR Newswire

MerlinMarch 4, 2016"More thoughts. Codestreet has been shopping itself for years. What changed at TradeWeb leading to an acquisition now? TradeWebs progress since its re-launch in Oct 2014 has been underwhelming. A leadership change in their credit bus…"
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Tradeweb Acquires CodeStreet LLC – PR Newswire

MustangMarch 4, 2016"Great. I need a new keyboard. Pirates?!? Aaaarrrggghh matey! https://www.youtube.com/watch?v=He-LBIyBUz8 CS has a robust tool, though that comes with longer integrations. I don't see bulge brackets deploying this with their info in…"
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Tradeweb Acquires CodeStreet LLC – PR Newswire

JesterMarch 4, 2016"On the surface, this acquisition makes a ton of sense, but there is an inside joke that is being missed here, and I for one will not let a good laugh go to waste. What nobody is talking about (when I say nobody, I’m talking to the m…"
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Tradeweb Acquires CodeStreet LLC – PR Newswire

WolfmanMarch 4, 2016"This should be a great acquisition and is testimony to the efforts that CodeStreet has made to lead the industry since its inception...smart guys building smart products. The questions that comes to my mind, however, isn't about Cod…"
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Tradeweb Acquires CodeStreet LLC – PR Newswire

MustangMarch 4, 2016"DealerPool needs to be enhanced to really gain traction. TW provides CDP more and larger counterparties, which is a positive. However, it remains to be seen if this is enough. The CDP D2D protocol is predicated on reducing informati…"
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Tradeweb Acquires CodeStreet LLC – PR Newswire

CougarMarch 4, 2016"Codestreet is a good acquisition for Tradeweb. The current woes in the secondary market are caused by lack of confidence. What is the real price for a block of bonds? I only know that if I know where blocks trade, what kind of accou…"
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Tradeweb Acquires CodeStreet LLC – PR Newswire

MustangMarch 4, 2016"This is an interesting acquisition. At its' core, Codestreet is a CRM. Data quality and usage are the lifeblood of any CRM. You don't need to look far to see that even salesforce.com and CRM's in mature sectors struggle with these e…"
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Tradeweb Acquires CodeStreet LLC – PR Newswire

IcemanMarch 4, 2016"Agree with all the comments. Perhaps taking another angle on this it is fairly obvious to me that a company like TradeWeb with it’s shareholder base, supposed connectivity to it’s client base and capital behind it should be able to…"
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Tradeweb Acquires CodeStreet LLC – PR Newswire

GooseMarch 3, 2016"I like this acquisition. A lot of the macro issues discussed here, balance sheet, technology advancement, regulation etc. historically make the electronic execution space more competitive and drive their execution costs down. Expand…"
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Tradeweb Acquires CodeStreet LLC – PR Newswire

MerlinMarch 3, 2016"Everyone knows sell side pre-trade workflow tools have made sense for a long time and been tried through various means going back 10+ years. Many large dealers have built multiple iterations of proprietary systems. Bloomberg went ar…"
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Electronic Bond Trading Platforms Seek to Attract Larger Orders – Bloomberg

MerlinFebruary 26, 2016"The answer is not in the platofrms. The answer lies with institutional investors. Are they willing to move their business to electronic platforms and what are the factors that influence this decision? That is, what problem is being…"
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Electronic Bond Trading Platforms Seek to Attract Larger Orders – Bloomberg

GooseFebruary 26, 2016"I echo Jester’s thoughts here. Have operators studied the markets they are trying to imitate? Even in the most liquid markets with standardized price discovery round lots don’t trade electronically. Dark pool average trade size is a…"
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Electronic Bond Trading Platforms Seek to Attract Larger Orders – Bloomberg

Byron C-FFebruary 26, 2016"" Maybe, just maybe trading notional sizes >=$5MM in markets that have very little activity require skill, judgement and experience, something that a push button solution may not be able to solve……" totally agree, Jester. That is…"
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Electronic Bond Trading Platforms Seek to Attract Larger Orders – Bloomberg

WolfmanFebruary 26, 2016"Market designs take many factors into account, not the least of which is who the participants are and what they need to do. Large block trades are used by different participants for different reasons. For AMs, it’s part of their DNA…"
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Electronic Bond Trading Platforms Seek to Attract Larger Orders – Bloomberg

CougarFebruary 26, 2016"The article talks about what the platforms want to achieve rather than the clients themselves. All of this skirts round the issues that each market constituency wants: an improvement to liquidity. What the platforms are suggesting w…"
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Electronic Bond Trading Platforms Seek to Attract Larger Orders – Bloomberg

JesterFebruary 26, 2016"Electronic bond trading is struggling to attract large orders? Let me adjust this for you: Electronic trading (in every asset class) is struggling to attract large orders. To back Chipper up on this point, a consequence of electroni…"
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Electronic Bond Trading Platforms Seek to Attract Larger Orders – Bloomberg

ChipperFebruary 25, 2016"I think this is an important concept and certainly a current topic of discussion. Everyone wants to do larger trades - the buyside and the venues are both motivated to do so. But the unfortunate reality is that "electronification" o…"
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Has Bond E-Trading in Europe Hit the Ceiling – Greenwich Associates

IcemanFebruary 20, 2016"A lot of great points raised by all and hopefully the below will add another slant. In the US there is TRACE (surprise right) and if you are a market maker you can make some pretty good assumptions on your market share in volume and…"
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Has Bond E-Trading in Europe Hit the Ceiling – Greenwich Associates

ViperFebruary 20, 2016"The lead article speaks volumes about the way ALLQ is dominating in Europe and how differently electronic corporate bond trading is effectively marketed in each region. No one in the US has ever developed a platform that incentivize…"
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Has Bond E-Trading in Europe Hit the Ceiling – Greenwich Associates

GooseFebruary 19, 2016"What I am trying to understand is, what is the value of a dealer paying a large fixed fee for RFQ flow that hundreds of firms (some quasi sell side) can see for a fraction of the cost? Paying a fixed fee for discretionary order flow…"
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Has Bond E-Trading in Europe Hit the Ceiling – Greenwich Associates

MerlinFebruary 19, 2016"Jester brings out an interesting point and I will defer to him on the accuracy of his statements. Personally I have never got this impression. It always seemed to me that actually more european accounts would pounce on an error than…"
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Has Bond E-Trading in Europe Hit the Ceiling – Greenwich Associates

WolfmanFebruary 19, 2016"So, before you read my comments, read Jester's - he's spot on! Anyway, for what it's worth, despite Bernie Sanders wishing that America was Denmark, it ain't. I think we're all in agreement that the Buy Side isn't some homogenous gr…"
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Has Bond E-Trading in Europe Hit the Ceiling – Greenwich Associates

JesterFebruary 19, 2016"Before we get into the theories of why there is a difference between etrading adoption in Europe vs. the US, do yourself a favor, call a European sell side trader and ask them what they think of the current corporate bond trading en…"
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Bond Trading Desks Get a Hand From Algorithmic, Equity Veterans – Bloomberg

MerlinFebruary 17, 2016"Cougar, are your last two sentences serious or tongue in cheek?…"
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Bond Trading Desks Get a Hand From Algorithmic, Equity Veterans – Bloomberg

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

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

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

IcemanFebruary 12, 2016"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 o…"
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Bond Trading Desks Get a Hand From Algorithmic, Equity Veterans – Bloomberg

MerlinFebruary 12, 2016"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…"
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Bond Trading Desks Get a Hand From Algorithmic, Equity Veterans – Bloomberg

JesterFebruary 11, 2016"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…"
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Thriving ETFs May Be Stoking a ‘Liquidity Illusion’ for Bonds – Reuters

ChipperFebruary 5, 2016"Fully agree with Charlie here, will put. I think it likely that individual investors are using ETFs as a liquid alternative to mutual funds, and that is a great development for the investor. The liquidity fears have not yet come to…"
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Thriving ETFs May Be Stoking a ‘Liquidity Illusion’ for Bonds – Reuters

MerlinFebruary 4, 2016"Did a little digging and if my numbers are right the largest HY etf has a daily trading value of just over 1B while the largest Hg etf is 400mm. I guess to be fair you may want to add up all the volume in each category but I find th…"
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Thriving ETFs May Be Stoking a ‘Liquidity Illusion’ for Bonds – Reuters

WolfmanFebruary 4, 2016"If people view ETFs as liquid and then apply that view of liquidity to the individual bonds, then yes, it is an illusion. ETFs are a wonderfully designed product designed to add yet another revenue stream for the APs responsible for…"
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Thriving ETFs May Be Stoking a ‘Liquidity Illusion’ for Bonds – Reuters

GooseFebruary 4, 2016"Searching for news articles, there seemed to be instances where even equity ETF’s have experienced large dislocations during periods of volatility and heavy retail selling. For fixed income ETF’s, the transparency, market makers, wi…"
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Thriving ETFs May Be Stoking a ‘Liquidity Illusion’ for Bonds – Reuters

CharlieFebruary 4, 2016"Question: Are ETFs replacing investors trading in individual bonds or are ETFs replacing bond mutual funds? Are retail investors finally rebelling against entering a an order at 10 a.m. and getting the closing price at 4 p.m while t…"
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Predicting the Death of the Bloomberg Terminal – Waters Technology

CharlieJanuary 29, 2016"People love to hate Bloomberg and therefore avidly read stories about its potential demise. The analogy of the cable TV subscription is interesting, I would beg to differ that messaging is the only reason people keep subscribing, it…"
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Predicting the Death of the Bloomberg Terminal – Waters Technology

GooseJanuary 29, 2016"I am in consensus with the main points here so I will just add my own spin. It starts with their social network. In cash fixed income, you can’t trade without the Bloomberg that is touching that entire community. That makes it extre…"
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Predicting the Death of the Bloomberg Terminal – Waters Technology

HollywoodJanuary 28, 2016"Not to inject politics…ah, what the heck. Trump opined on Bloomberg potentially entering the presidential race this week. He further injected an ego driven net worth comparison (as it pertains to the News Letter topic): Trump stated…"
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Predicting the Death of the Bloomberg Terminal – Waters Technology

WolfmanJanuary 28, 2016"Bloomberg is the social network for the Financial Services industry and although the application leaves much to be desired, the power o the network will be difficult to replace. It can happen, but there are ways in which companies h…"
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Predicting the Death of the Bloomberg Terminal – Waters Technology

MerlinJanuary 27, 2016"There are plenty of excellent solutions out there for many, if not most, of the functionality offered by Bloomberg. Plus, many of them are both 'better' (user friendlier) as well as being less expensive! In addition, as mentioned by…"
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Predicting the Death of the Bloomberg Terminal – Waters Technology

CougarJanuary 27, 2016"Institutions want to reduce (or ideally eliminate) their Bloomberg Terminal usage because of the high fixed cost, but importantly because it doesn’t provide what they need. So why is the Terminal so ubiquitous? Communication – as th…"
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How Do You Define Bond Liquidity? – Bloomberg

WolfmanJanuary 23, 2016"My remarks are brief as the others have done a superb job with this week's post. Maybe it was the full moon this week that turned me into a monster, but I see things simply. Governments, companies, people, Wolfmen, all act in their…"
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Forget Junk, Many 3rd Ave Holdings are Trash – The Street

CougarJanuary 23, 2016"This is really a non-story as it is merely the risk-reward pay-off demonstrating high risk means that you can lose money If there is a story, and I'm sure there is, it would be around the marketing of the fund and the transparency u…"
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How Do You Define Bond Liquidity? – Bloomberg

CougarJanuary 23, 2016"In defining liquidity we often get distracted into the discussion about the causes and challenges of executing secondary trades compared to the recent past rather than the definition itself. There can be no fixed measure of liquidit…"
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How Do You Define Bond Liquidity? – Bloomberg

ZobJanuary 23, 2016"Some impressive thoughts and comments so far... but I don't believe the fundamentals have changed... liquidity is primarily a consequence of willing buyers and willing sellers. In this new world -on a good day- with traditional mark…"
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Discount Retailer Overstock Has a New Target: Upending Wall St – Bloomberg

CougarJanuary 23, 2016"Bonds on the blockchain as a panacea to our liquidity problems is a misnomer. All-to-all trading will fair no better in a native blockchain bond infrastructure that it does now. Knowing who holds bonds would allow us to trade much b…"
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Discount Retailer Overstock Has a New Target: Upending Wall St – Bloomberg

CougarJanuary 23, 2016"Blockchain is merely a new form of database that has both downsides and benefits. The current hype we see ignores this truth. Many of its proponents should use a traditional centralized database – but they are blinded. However this…"
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How Do You Define Bond Liquidity? – Bloomberg

CharlieJanuary 22, 2016"A great initiative by the Fed. I am tired of different measures of liquidity being quoted by different people depending on which point they wish to prove. If the Fed can get their hands around this one perhaps we can all have a mean…"
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How Do You Define Bond Liquidity? – Bloomberg

MerlinJanuary 22, 2016"I would be curious to hear if people think the below is at all interesting, meaningful or correct regarding the Treasuries questions on liquidity in the UST market. It seems to me that people are not talking about one of the most im…"
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How Do You Define Bond Liquidity? – Bloomberg

GooseJanuary 22, 2016"Sundown’s last point is a good one. Fair access, anonymous markets featuring full pretrade transparency bring tremendous adverse selection risk, and market makers respond accordingly. Small size, tight or wide markets, depending on…"
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How Do You Define Bond Liquidity? – Bloomberg

ChipperJanuary 22, 2016"I think the most relevant definition of liquidity is something along the lines of "(Market Impact)/(Volume)." In other words, how much can you get done per unit of market impact? Looking solely at bid-offer badly misconstrues the re…"
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How Do You Define Bond Liquidity? – Bloomberg

SundownJanuary 21, 2016"There are several definitions of liquidity, and like everything else, definitions change according to the context in which they are viewed. One example of this happened in a conversation I had with a friend the other day who saw the…"
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Discount Retailer Overstock Has a New Target: Upending Wall St – Bloomberg

MerlinJanuary 17, 2016"my understanding is that issuance on the blockchain would be critical, another reason why a transformation will take so long. i dont get the short offer comnent. just because you may be able to message holders of a security (assumin…"
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Discount Retailer Overstock Has a New Target: Upending Wall St – Bloomberg

samuel dalyJanuary 17, 2016"In my mind the only way to achieve something meaningful w.r.t to bonds and blockchains is to actually issue the bonds from the start on the chain. Simply bolting on blockchain technology to existing stack may have some benefits (bac…"
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Discount Retailer Overstock Has a New Target: Upending Wall St – Bloomberg

CharlieJanuary 16, 2016"That is a great question and one for which I have yet to hear a reasonable answer. Blockchain is built around the premise that you exchange what you have. One guess at how this might work is that you borrow the bonds before you offe…"
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Discount Retailer Overstock Has a New Target: Upending Wall St – Bloomberg

IcemanJanuary 16, 2016"http://www.sytaylor.net/wp-content/uploads/2015/05/dilbert-chain.jpg…"
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Discount Retailer Overstock Has a New Target: Upending Wall St – Bloomberg

MerlinJanuary 16, 2016"Sorry if repeating anything as cannot see any of the 6 comments that were already posted. I will simply say that from what I have learned about blockchain to date, it has A LOT of potential to make a huge impact on the markets. If i…"
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Discount Retailer Overstock Has a New Target: Upending Wall St – Bloomberg

IcemanJanuary 16, 2016"I have spent a few weeks over xmas asking some fairly intelligent technologists about Blockchain and after hours of discussion I have realized 1 thing. Maybe 10 people in the world really understand what it is in relation to the fin…"
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Discount Retailer Overstock Has a New Target: Upending Wall St – Bloomberg

Michael RossJanuary 15, 2016"Enjoying the comments here - and 100% agree that completely dis-intermediating Wall Street is a pipedream - just as the "promise of the internet" in the 90's was that we would not need media companies and newspapers and books would…"
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Discount Retailer Overstock Has a New Target: Upending Wall St – Bloomberg

GooseJanuary 15, 2016"I feel like Unfrozen Caveman Trader today, “I am just a simple caveman, the world of blockchain confuses and frightens me”. I am sure the blockchain concept can save a lot of money in payments and settlement processing, which is goo…"
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Discount Retailer Overstock Has a New Target: Upending Wall St – Bloomberg

CharlieJanuary 15, 2016"Isn't upending Wall Street everybody's dream? Presumably getting in the middle of billions of dollars of transactions and becoming the next Mark Zuckerberg / Bill Gates. That said, it has to be admitted that 3 days to settle an equi…"
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Discount Retailer Overstock Has a New Target: Upending Wall St – Bloomberg

WolfmanJanuary 15, 2016"Chain, chain, chain.....chain of fooooools..... The frenzy that has erupted around block chain technology reminds of the promise in the 90s that weblogs would replace websites. That promise remained mostly unrealized until a company…"
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Discount Retailer Overstock Has a New Target: Upending Wall St – Bloomberg

ZobJanuary 15, 2016"Every initiative lately has branded itself as 'disruptive' and it makes me cringe. Every new initiative is somehow linked to Uber, Spotify and Ebay and if you don't understand or appreciate what they're doing then you're seen as the…"
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Confessions of an All to All Advocate – Larry Fondren (TABB)

MerlinJanuary 9, 2016"Thanks Larry. I think it would be helpful to know how the negotiations actually occur within the digital DelphX netowrk. i mean, how does one communicate that I would like to have an order on 25mm of xyz bonds at z spread (i guess c…"
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Confessions of an All to All Advocate – Larry Fondren (TABB)

Larry FondrenJanuary 8, 2016"Merlin - I don't have a problem with your assessment that a pending transaction for which all terms have been agreed, but has not yet been executed, could also be considered as a "firm order" that has been mutually structured betwee…"
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Confessions of an All to All Advocate – Larry Fondren (TABB)

MerlinJanuary 8, 2016"How do you have a 'trade' that is 'not a trade'? If the dealer can decide not to execute it then it was never a trade but a firm order for a set period of time that cannot be canceled by the buy side. Are you envisioning these 'trad…"
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Confessions of an All to All Advocate – Larry Fondren (TABB)

Larry FondrenJanuary 8, 2016"No. It is an asset manager (or another investor) negotiating with a given dealer the terms of an immediately executable trade while concurrently negotiating the terms of a binding contract that: 1) postpones execution of the trade f…"
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Confessions of an All to All Advocate – Larry Fondren (TABB)

Larry FondrenJanuary 8, 2016"Merlin - Thank you for your interest and comprehensive questions. First let me clarify that, while I believe all-to-all trading is certainly viable for smaller-sized trades of standardized issues, it is clearly not the trading forum…"
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Confessions of an All to All Advocate – Larry Fondren (TABB)

ChipperJanuary 8, 2016"So would you describe it as an asset manager setting some positions as "available to trade" and committing them to a certain dealer, but no trade has been agreed on?…"
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Confessions of an All to All Advocate – Larry Fondren (TABB)

Larry FondrenJanuary 8, 2016"Goose - Thank you for your interest and questions. The DelphX network is structured to offer dealers and investors a variety of protocols by which to confidentially (and, if they choose, anonymously) communicate their potential inte…"
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Confessions of an All to All Advocate – Larry Fondren (TABB)

MerlinJanuary 8, 2016"Lets start with the first sentence before we get to the real topic..."Despite the benefits offered by all-to-all....electronic trading platforms..."....Maybe just my bias but Larry it sounds to me that you really haven't given up th…"
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Confessions of an All to All Advocate – Larry Fondren (TABB)

GooseJanuary 7, 2016"This is an interesting concept, but I can’t fully evaluate it given the operational, regulatory, fiduciary, and trade economics questions I have. I checked the website but didn’t find much more detail around the process…am guessing…"
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Confessions of an All to All Advocate – Larry Fondren (TABB)

Larry FondrenJanuary 7, 2016"Wolfman - Thank you for your considered skepticism (and for the chance to revisit a favorite line from My Cousin Vinny). What may not have been clearly conveyed in the article is the fact that the "Inventory" that is contractually c…"
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Confessions of an All to All Advocate – Larry Fondren (TABB)

Larry FondrenJanuary 7, 2016"Chipper - Thank you for your considered insight. The accounting principles and FINRA rules to which you refer wouldn't apply to a pending transaction that has been postponed to create a deployable Cached Inventory in the subject iss…"
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Confessions of an All to All Advocate – Larry Fondren (TABB)

ChipperJanuary 7, 2016"While a thoughtful potential addition to market structure for certain trades that warrant the time/negotiation that this would seem to entail, I have trouble seeing how this doesn't violate accounting principles, not to mention FINR…"
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Confessions of an All to All Advocate – Larry Fondren (TABB)

WolfmanJanuary 7, 2016"This is a lucid, well thought out and intelligent article, but I'm not certain I'm convinced. Mr. Fondren proposes that a "dealer and investor negotiate the terms of a future transaction in which the dealer will buy or sell a specif…"
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Forget Junk, Many 3rd Ave Holdings are Trash – The Street

SliderDecember 17, 2015"Excellent article! While other media outlets are reporting this incident as a portent of things to come in the broader debt market, this piece sticks to the facts regarding Third Avenue's actual portfolio. The distressed bond market…"
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Forget Junk, Many 3rd Ave Holdings are Trash – The Street

WolfmanDecember 17, 2015"To be fair, the fund's prospectus states the fund might look to make investments in bankrupt companies and that those holdings could be difficult to sell. Also, the fund is a high-yield and distressed fund, so by definition the hold…"
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Forget Junk, Many 3rd Ave Holdings are Trash – The Street

GooseDecember 17, 2015"I echo Merlin’s thoughts on the investors in this fund. Perhaps shades of Captain Renault in Casablanca? https://youtu.be/qmywwiZth5E Rick: How can you close me up? On what grounds? Renault: I am shocked, shocked to find that gambli…"
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Forget Junk, Many 3rd Ave Holdings are Trash – The Street

MerlinDecember 17, 2015"As regards the article itself, not clear to me why the author is being so hard on Third Avenue Mgmt. Just based on the article (I did not research, googling, etc... on my own) it seems that the fund prospectus clearly stated the typ…"
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When Can Bond Traders Lie to Their Customers – Bloomberg View

ZobDecember 11, 2015"Mortgage Bonds. Thrifts. 80s... Ha ha! how the world has changed... and for the better BUT at the same time is this about changing human nature or just applying the old Pinocchio saying of 'don't lie or at least don't get caught lyi…"
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When Can Bond Traders Lie to Their Customers – Bloomberg View

MerlinDecember 11, 2015"Wet towels are ok. If a house last sold for $1.5mm and is now listed at $1.2mm, is that an opportunity to purchase from a motivated seller or have equivlent houses been selling for $1mm still overstating the value of this house. It…"
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When Can Bond Traders Lie to Their Customers – Bloomberg View

ChipperDecember 11, 2015"Sorry to be the wet blanket, but I think the used car analogy doesn't fit well here. But to stick with it, what if the car was being financed by the dealer, and they sold it to you at $20,000 but then valued it at $17,000 for financ…"
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When Can Bond Traders Lie to Their Customers – Bloomberg View

MerlinDecember 10, 2015"First is reaction is they are kidding. Traders constantly mis-represent the level they bought or can buy bonds (at least pre-TRACE or those not reported on TRACE) as they use any/all tools/methods to extract the maximum amount of pr…"
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When Can Bond Traders Lie to Their Customers – Bloomberg View

GooseDecember 10, 2015"If I recall correctly some of the trades in question were non-agency RMBS, and Commercial MBS. This is the kind of stuff that has a fair amount f optionality in it around presumptions on prepayment speeds, loan quality, deal structu…"
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When Can Bond Traders Lie to Their Customers – Bloomberg View

Rob HedgesDecember 10, 2015"Wolfman took the words out of my mouth. The article screams second hand car salesman. It would be nice to think that the financial industry operates to a higher standard but so often this is not the case. Salesman appeal to the fear…"
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When Can Bond Traders Lie to Their Customers – Bloomberg View

WolfmanDecember 10, 2015"This can be one of the most hotly debated focus articles to date. Here’s one way to look at it, and I’ll use the used car dealer reference in the article to make my point. Here goes. Car dealers make more on used cars than new cars.…"
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When Can Bond Traders Lie to Their Customers – Bloomberg View

JesterDecember 10, 2015"In my experience as a bond trader I worked under the knowledge that bond brokers lied for a living, so their input was always discounted. As a salesman I believed you had some a fiduciary duty to the customer and were always at risk…"
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What’s happening to liquidity in the bond market? – Brookings Institute Video

CharlieDecember 3, 2015"A thought provoking video including brief presentations by three eminently qualified people from Stanford, Harvard and the Fed. I found it worth an hour of my time. Here are some of the things that I came away with: The Moderator Da…"
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Middlemen the Key to Corporate Bond Market’s Electric Dreams – Reuters

MerlinNovember 13, 2015"What I would like to read about is the progress that these alternative platforms are making. How many participants do they REALLY have? How many fully executed documents do they have back? How many firms are executing transactions o…"
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Middlemen the Key to Corporate Bond Market’s Electric Dreams – Reuters

GooseNovember 13, 2015"Break out the torches and storm the castle! I love all this talk about eliminating the unnecessary dealer/liquidity provider, we don’t need them!! Question, what would the market of the most liquid, regulated price formation market…"
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Middlemen the Key to Corporate Bond Market’s Electric Dreams – Reuters

WolfmanNovember 13, 2015"There's so much here to work with. It seems that the reality is beginning to sink in. e-commerce solutions don't eliminate the need for all traditional methods of commerce. Hell, Amazon has opened a physical bookstore! Bonds aren't…"
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Middlemen the Key to Corporate Bond Market’s Electric Dreams – Reuters

ZobNovember 13, 2015"Having no special sympathy or otherwise for Market A, all I can say is that by adding a simple protocol to their offering rather than 'revolutionising' the universe they have unlocked liquidity (especially in Europe) and good to the…"
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Middlemen the Key to Corporate Bond Market’s Electric Dreams – Reuters

HollywoodNovember 12, 2015""It's been the realm of the big bulge brackets and they've made so much money that they've crowded everybody else out of the market," said Seth Merrin, chief executive officer of brokerage Liquidnet. – Seth, did you know that NYSE h…"
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Are IDBs Obsolete? (Chris Ferreri) – Tabb Forum

SundownNovember 11, 2015"One can argue that the IDBs have been the one of the most innovative participants in the current market structure. They are not the fat, lazy person on the other end of a phone yelling like they once were. They are sophisticated bus…"
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Middlemen the Key to Corporate Bond Market’s Electric Dreams – Reuters

CharlieNovember 10, 2015"One can't help but think the writers have hit on something when they allude to the role of the primary markets in propping up the popularity of dealer to client systems such as MarketAxess. MarketAxess does of course provide very va…"
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Are IDBs Obsolete? (Chris Ferreri) – Tabb Forum

CharlieNovember 10, 2015"The question that immediately sprang to my mind on reading this article was 'are dealers actually becoming brokers'? One can perhaps see why dealers are getting so upset when IDBs start to speak with clients. Dealers value propositi…"
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Are IDBs Obsolete? (Chris Ferreri) – Tabb Forum

Gab FredianiNovember 8, 2015"You only have intermediation if there's money paid for a valuable service. In the old days some of this added value was made up of entertainment and other nicies that are no-go today! I remember discussing what made a good broker: '…"
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Are IDBs Obsolete? (Chris Ferreri) – Tabb Forum

GooseNovember 6, 2015"There changes Mr. Ferreri mentions are definitely causing a lot of angst in the IDB/Dealer relationship. The value proposition that drove the compensation structure of the IDB market continues to be under pressure. Dealers mainly pa…"
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Humans 1, Machines 0 – Bloomberg View

MerlinOctober 30, 2015"The issue isn’t ‘humans vs. machines’. It is people no longer willing to share information they way they once did. Things have gotten so bad that the buy side, in surveys, have stated that they break up trades, presumably to hide in…"
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Humans 1, Machines 0 – Bloomberg View

GooseOctober 30, 2015"Interesting take on the acquisition. I was thinking that as their core futures business matures, ICE was looking more at it as a diversity play with consistent revenue than as a statement around FI trading. Anyway, I completely agre…"
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Humans 1, Machines 0 – Bloomberg View

WolfmanOctober 29, 2015"I summed this up as “putting your money where your mouth is”. Isn’t it interesting that in the same week we learn some of the details surrounding a $25 million investment from Peter Thiel and George Soros for a fully electronic bond…"
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Humans 1, Machines 0 – Bloomberg View

ChipperOctober 29, 2015"While I don't disagree with the premise that humans are important, I don't think this deal show that. In fact, I think it points more to a disturbing "rise of the machines" than does electronic trading (which is still done bilateral…"
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Humans 1, Machines 0 – Bloomberg View

HollywoodOctober 29, 2015"The article states: “The deal underscores the many ways in which bond trading is unlike buying a book or a vacuum cleaner or a 24-pack of toilet paper online.” The implication is that certain corporate bonds are not highly liquid an…"
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Opportunism and Restraint on Wall Street – Mitchel Abolafia (1989)

MerlinOctober 23, 2015"Now you know what happened to liquidity. People tried and continue to try to turn the art into a science. I am not suggesting the markets need to revert to policies and protocols from the 80's. The 90's and early 2000's are goo enou…"
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What’s the Biggest Challenge to Innovation in Capital Markets? – Financial News

WolfmanOctober 16, 2015"Walmart's focus on innovation in retail helped it to create the world's largest retailer. That said, the stock tanked this week because it is taking some very big steps in increasing the minimum wage they pay their employees and mak…"
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What’s the Biggest Challenge to Innovation in Capital Markets? – Financial News

Paul ReynoldsOctober 16, 2015"It's not just a problem in capital markets. Look at any innovation in the last ten years in finance and you will find it came from a non-bank initiative. Paypal, Transferwise, Apple Pay, Bitcoin, crowfunding etc... Every part of ban…"
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What’s the Biggest Challenge to Innovation in Capital Markets? – Financial News

GooseOctober 15, 2015"Innovating across business silos generally presents the unstated question, “Who’s ox is going to get gored?” The innovation benefits the overall firm, but key personnel in the silos needed to cooperate may suffer gains or losses fro…"
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What’s the Biggest Challenge to Innovation in Capital Markets? – Financial News

CharlieOctober 15, 2015"After years of cutting IT budgets to the bone, directing all expenditure to meeting new regulatory hurdles and shutting out requests from business lines to fund new products and change requests for competitive developments, an Innov…"
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What’s the Biggest Challenge to Innovation in Capital Markets? – Financial News

MerlinOctober 15, 2015"I love this article as it really highlights something those of us that have spent many years both in capital markets businesses as well as at innovative technology start-ups have lived and experienced first hand in a myriad of ways.…"
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Has US Corporate Bond Market Liquidity Deteriorated?- Liberty Street Economics

StingerOctober 8, 2015"And to think, these past several years all we needed was a few arbitrary references to a handful of loosely defined charts to prove there are no liquidity issues and to support theories of a major positive shift in market structure.…"
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Has US Corporate Bond Market Liquidity Deteriorated?- Liberty Street Economics

WolfmanOctober 8, 2015"Not only is this "illogical", it doesn't take into account that RATES ARE PERSITENTLY LOW and these low rates must be taken into account when making a judgment that bid ask spreads are low by historical standards. I can see Captain…"
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Has US Corporate Bond Market Liquidity Deteriorated?- Liberty Street Economics

MerlinOctober 8, 2015"These guys work for the Fed? Does that mean they are govt employees and we pay their salaries? Ugh. I don't pretend to know the answers to the questions posed, although i have my opinions, but this study seems extremely flawed. Lets…"
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Has US Corporate Bond Market Liquidity Deteriorated?- Liberty Street Economics

GooseOctober 7, 2015"Whoa, I have several thoughts/questions about this article before I also leap onto the “all is well” square on my “Jump to Conclusions Mat”.* - 400 Billion in corporate bond US dealer inventory? I have seen different numbers, but ne…"
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The Perils of Forcing a Sale of Illiquid Assets – DealB%k

MerlinOctober 2, 2015"The shady business of Hedge Funds. Who really knows what goes on behind those walls...... The Pension Investment Board of Canada, whomever that is (dopey me) was the LARGEST investor in the Saba Fund. Why? Was there a personal relat…"
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The Perils of Forcing a Sale of Illiquid Assets – DealB%k

GooseOctober 2, 2015"Agreed Wolfman. When you want to/HAVE to move something it’s worth what someone will pay for it at that instant, period. I am sure there could be a lot more to the story, but if I have this right, Saba has this distressed position m…"
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The Perils of Forcing a Sale of Illiquid Assets – DealB%k

CharlieOctober 2, 2015"If my math is correct they are suing over 2.4% of the portfolio value. I don't see an egregious miss marking of assets here, it could easily be within the bid / offer for the size of the position. The client knew the fund strategy a…"
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The Perils of Forcing a Sale of Illiquid Assets – DealB%k

WolfmanOctober 2, 2015"THE ONLY BUYER! Oh boy. Bottom line, there is a price of immediacy and yes, that price will vary. What thinks you?…"
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The Perils of Forcing a Sale of Illiquid Assets – DealB%k

WolfmanOctober 2, 2015"Another article on the liquidity illusion! Hmmm, did any of our readers attend the recent SIFMA Liquidity Forum on Wednesday? NYFRB President Bill Dudley made some interesting comments about liquidity. Interesting? Maybe that was a…"
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Liquidity Rules Proposed On Outflow Fears – FT

WolfmanSeptember 25, 2015"I hope whoever is subscribing to the Friday newsletter appreciates the value that it brings. Over the last few months, the focus articles have steadily built upon a theme. That theme is the overall transparency and liquidity of the…"
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Liquidity Rules Proposed On Outflow Fears – FT

CharlieSeptember 25, 2015"Good to see the SEC reacting to the noise about broken bond markets and illiquidity. It is not necessarily bad news for investors or mutual funds. One benefit would be investors remaining in the fund are no longer penalized by havin…"
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Liquidity Rules Proposed On Outflow Fears – FT

MerlinSeptember 24, 2015"It seems to me that it would be a good thing for more disclosure around a particular funds liquidity and would be considered an improvement over today's requirements. Investors could then take this expected/hoped for improved disclo…"
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Transaction Costs, Trade Throughs, and Riskless Principal Trading in Corporate Bond Makets – USC Marshall School of Business (Larry Harris)

StingerSeptember 20, 2015"The amount of research and analysis done to support this paper is impressive. Having done some analysis of trace and quoting data (albeit not to this extent), I do share some of the views (as well as some of the frustrations) around…"
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Transaction Costs, Trade Throughs, and Riskless Principal Trading in Corporate Bond Makets – USC Marshall School of Business (Larry Harris)

MerlinSeptember 19, 2015"I was going to take a pass on this one because the paper deserves a lot more attention than I am able to give it right now but Wolfman hit a chord with me. What good is having a 'fairer' price dissemination method if there are no pr…"
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Transaction Costs, Trade Throughs, and Riskless Principal Trading in Corporate Bond Makets – USC Marshall School of Business (Larry Harris)

WolfmanSeptember 18, 2015"I will openly admit that I have not analyzed this paper as closely as the effort put into preparing demands. That said, it leaves me with this nagging question. Why is it that the credit market is continually compared to the equitie…"
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Transaction Costs, Trade Throughs, and Riskless Principal Trading in Corporate Bond Makets – USC Marshall School of Business (Larry Harris)

CharlieSeptember 17, 2015"The authors have clearly done a lot of analysis as I have only skimmed the article and my experience is in the institutional market I found myself disagreeing from page 1! Perhaps the authors points are actually more related to prac…"
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Transaction Costs, Trade Throughs, and Riskless Principal Trading in Corporate Bond Makets – USC Marshall School of Business (Larry Harris)

GooseSeptember 17, 2015"Goose is in agreement with the author that there is plenty of shenanigans in the retail markets, and the main culprit is the asymmetrical information individuals, and to a lesser extent dealers, have access to. I was just poking aro…"
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The New King of Electronic Trading is…-Greenwich Blog

MerlinSeptember 11, 2015"Thought provoking and some excellent comments by Charlie and Hollywood (you guys/gals been practicing?! :) ) Would be interesting to see this as a time line as implied by Hollywood and notional as suggested by Charlie. Think would t…"
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The New King of Electronic Trading is…-Greenwich Blog

HollywoodSeptember 11, 2015"McPartland states: “Driven primarily by new rules requiring index CDS trades to be executed on a swap execution facility, the dealer-to-client market for CDX.IG trades is now the most electronically traded in the US” – The implicati…"
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The New King of Electronic Trading is…-Greenwich Blog

CharlieSeptember 11, 2015"Fascinating chart from Kevin McPartland, as always! I can't help wondering what the chart would look like if Equities were displayed on a notional basis instead of commission dollars. If we were to take out the 'regulatory effect' i…"
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Why FinTech is Hard: Lessons from the CEO of BondCube – Huy Nguyen Trieu

Towards a Fully Automated Stock Exchange (Part 1) – Fischer Black (1971)

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