Now more than ever, people are demanding to know what the deal is with markets in transition. And rightly so! Coming out of the two-day Fixed Income Summit in Boston, we realized even more how pivotal the time is for Fixed Income. In fact, almost every discussion during the conference emphasized the shifting landscape and its associated challenges, like the evolving roles between buy side and sell side, current limitations around pre-trade transparency, liquidity and electronification, and increasingly stringent and complicated regulations.
It was great to see Corvil influence these conversations and be able to contribute directly. Among the day’s talks, Corvil’s Chief Business Development Officer David Murray shared his own insights on pre-trade transparency capabilities on the 360 Perspectives panel, “Improving Transparency Across Bond Markets,” alongside other top executives from Aberdeen Asset Management, Algomi, KCG, and Banca IMI Securities.
Attendees learned there is a disproportionate $25T in debt holdings on the books of buy-side firms with limited liquidity/risk capital at play from the dealers as a result of capital charges imposed by the post-crisis reforms. That’s all given way to a manual burden of finding liquidity. Due to the balance sheet restrictions of sell-side firms, they are less likely to do large trades – especially of illiquid securities.
Moreover, should treasuries have available TRACE data and be moved to a clearing model? It was one of several hot questions David and the other panelists worked to address. And the curiosity didn’t stop there. What’s the relationship between data analysis and pre-trade transparency? Is pre-trade transparency a big data problem? What are some of the non-traditional data sources already in use or needed for buy and sell-side firms to be more effective? And lastly, how do you leverage technology and data to improve pre-trade transparency as well as how to measure liquidity and capture data?
Both “big data” and “continuous data” are at play here, and it was obvious that the thread to tie all of the other themes of the conference together was around the data and data analysis arms race that will soon be abloom. That is, the ability to adapt and accommodate new, voluminous, and ephemeral data sources as well as correlate more established ones is becoming one major area of need.
In a time of geopolitical uncertainty, interest rate hikes and increasing electronification, it’s understandable why market participants and industry experts are limited in the visibility they have and demanding answers fast. To solve these challenges, there is a natural look to technology to help identify elements such as who has what, who is interested in what, at what price, and what is considered a fair price. On the bright side, there are a number of available data sources. On the other hand, these data sources are disparate, so the magic lies primarily in how well participants (on all sides) can capture, process, analyze, and react to this information. The ability to gain rapid, continuous insight from the data and use non-traditional sources to evaluate market and counterparty performance is a powerful ally. Above all else, bringing “in-sight” to the darkness is always the greatest protection and competitive edge in changing, fast-moving markets.
We, and the rest of the attendees, learned so much at this year’s summit, we’re excited to see what’s next on the Fixed Income frontier. Thanks to all that made it a great success, and for those who stopped by our booth to learn about our solution for Fixed Income analytics (including our Oculus Rift Raffle winner, Kevin Barrett from Quantitative Brokers!).