The electronification of the fixed income market has delivered many benefits along with a host of significant challenges. A new report from Refinitiv, produced in collaboration with Greenwich Associates, unpacks how leading-edge technology and trusted data is helping traders get a better view of this vast and complex market.
- The electronification of fixed income markets has brought traders better access to more usable data, but still has an uphill climb to help firms that are under pressure to increase efficiency levels.
- Trusted and complete data has become the lifeblood of the industry, but synthesizing, aggregating and unifying disparate data sources can create a significant hurdle for firms both large and small.
Much has already been accomplished in terms of data aggregation, but to fully reap the benefits, technology must step up to the plate with ever-more efficient and effective solutions.
The ever-increasing electronification of the fixed income market has had undeniably positive effects, including enhanced transparency and liquidity, as well as more efficient trade analysis and processing.
The rapidly changing landscape, however, has led to significant changes for all market participants. The old-school approach that relied heavily on telephones and good broker relationships has undergone a complete metamorphosis. It now comprises APIs, real-time data, and increasingly significant levels of automation.
Fierce competition and tight margins mean that firms across the board are under pressure to improve efficiency levels, and many are looking to achieve this through integrated, streamlined solutions that deliver a holistic market view in a single place.
The critical nature of data
Data is the lifeblood of successful trading. And more and better data undoubtedly creates more opportunity. However, if the tools and ability to synthesize, aggregate and unify this data into a single, actionable view are absent, the benefit is lost.
The necessary data must be acquired from myriad sources, including trading platforms, exchanges, market data aggregators, reference data providers, dealers and alternative data providers. And, with more than 70 different fixed income asset classes, the challenge remains vast.
Choosing the most appropriate feeds, and then integrating these into existing workflows to create a holistic view can seem like an impossible task. No single solution able to aggregate all necessary tools and data in a single place exists. Equally, using a single source of information and functionality will not suffice – and can quickly translate into missed opportunities.
The solution to remaining successful and relevant lies in securing access to the most productive trading protocols, data and analytics, as efficiently and cost-effectively as possible.
Those that succeed can turn a significant challenge into an opportunity to boost efficiency levels; develop a more holistic market view; and make better, faster decisions.
Technology is stepping up to the plate
Faced with the challenge of aggregating the vast universe of fixed income data, technology solutions become increasingly critical.
Flexibility is the key. Many traders are seeking to create a blend of vendor data, specialist data, and their own proprietary data and solutions with a single dashboard-type view.
This demands a ‘best-of-breed’ technology approach that enables different data sources and apps, often from different firms, to work together in a seamless and user-friendly way.
A new report from Refinitiv and Greenwich Associates concludes that, moving forward, technology will allow disparate data sources and apps to run as one, in a similar way to how web browsers have morphed into app containers today.
Refinitiv is uniquely positioned to support firms as they navigate these far-reaching changes. We offer both our own market-leading data and exclusive datasets from our trusted partners, combined with complete flexibility that lets our clients choose what to use and how.
Our constantly evolving tools and datasets address the expanding universe of fixed income opportunities and deliver a consistent view across products that allows for appropriate levels of standardization while still respecting asset class specifics.
Finding alpha in the market
Despite the many challenges faced by the fixed income market — specifically those that relate to aggregating and unifying data — a significant 39 percent of investors feel that the buy-side, not the sell-side, has the information advantage. This suggests that much progress has already been made in information aggregation.
Unifying the market into something that looks and feels like a single interface remains challenging, but is increasingly obtainable.
As the fixed income arena continues to change and adapt, trusted data and ever-evolving technology will support market participants, helping them to find alpha in a progressively efficient and seamless market.