Fixed-Income Road Rumblings

“The electronic trading data for September shows so much growth year over year
that we had to double-check the data to be sure nothing was wrong.”

– Greenwich Associates, October 17, 2022 

Fixed income traders around the world are tied to their desks, as economic storm clouds gather and volatility persists. Yet, despite desks focussing on navigating tumultuous markets, the fixed income industry has been gathering at conferences around the world to discuss the future of bond trading.

Whether at the Fixed Income Leaders Summit in Nice, France, The Hive or the Institutional Investor Fixed Income Trader Forum, both in Boston, delegates have been locked in discussion about how technology and data are transforming our industry. As we look to chart the path for the future trader, the TS Imagine team was out in force at these conferences, speaking on panels and debating with our peers on what this new era in financial markets means for participants.

For me, as a former buy-side credit trading head, the direction and the appetite for technology in the industry is incredibly exciting. Were you glued to your desk and unable to attend? No problem – here’s what you need to know:

  • From bond king to data king: Data has become so essential to fixed income traders that not having access is a significant disadvantage. In some cases, however, traders are suffering from having too much of a good thing – meaning they are struggling to draw actionable insights from vast swathes of data. The solution? Using tools that allow traders to intuitively harness the aggregation of execution and liquidity data ensures that they are able to create actionable conclusions that save on transaction costs and increase efficiency.
  • Traders’ roles are changing: With a more tech-savvy generation moving into the driving seat, which skills will define the leaders of the future? The new generation of traders will be focused on developing their data sourcing and coding skills, mining and crafting an increasingly valuable resource, leading us to wonder how Sherman McCoy would do as a bond trader in 2022.
  • Familiarity provides comfort and benefits: According to Greenwich Associates, “conversations with market participants suggest that dealers are offering better prices through direct streams, where client and dealer know each other, than they are in anonymous markets”. We agree and have seen this trend first hand from conversations with our clients – this is why we offer direct dealer connections through our fixed income EMS. For example, we connect to JP Morgan, Citi, and Bank of America, with more leading dealers coming soon.
  • The value of technology must be proven: As investment banks cut jobs and muse about an impending recession, demonstrating how technology moves the dial gives desks a competitive advantage. From our perspective, the answer is simple – technology investments must satisfy four key principles to demonstrate ROI – speed, safety, savings and scale. Let me explain:
A proper Execution Management System (EMS) significantly reduces the time it takes to fill orders with rapid pre-trade data provision and automation tools for liquidity taking and providing. Traders can quickly access their preferred execution pathways, meaning that they can outmaneuver competitors and react quickly to changes in the market.
Electronic trading preserves the integrity of the order, while maintaining transparency and ensuring there are guardrails in place for safe trading throughout the order lifecycle.
The cumulative effect of smarter protocol selection, rapid identification of contra opportunities and embedded automation tools produce verifiable savings in time and transaction costs.
Technology must be able to expand in parallel to a businesses’ growth. Having cross-asset capabilities, for example, clears the way for businesses to scale by simplifying workflows.

What is clear from our experiences at the various conferences around the world is that fixed income trading is changing and participants are realizing that technology is an essential tool in fast-evolving markets. The panels and discussions also highlighted the demand for our offering – supplying vital tools for the fixed income trader of the future. From our electronic trading blotters – providing a level of detail that creates a feeling of safety for all those involved – to our EMS, the ultimate Do More with Less tool, we are equipping the desks of tomorrow. As volumes and trade count continue to surge, our platform gives buyside firms the ability to increase their trading throughput with tech-assisted efficiency gains.

Spencer Lee
Spencer Lee, Chief Markets Officer & Head of Fixed Income
About the Author

Spencer Lee is the Chief Markets Officer of TS Imagine. Spencer has over two decades of experience in fixed income markets, with a focus on the evolution of systematic trading of credit securities.

Spencer brings extensive market structure experience and client perspective to TS Imagine. He most recently co-founded Agilon Capital, a systematic credit hedge fund with a strong technology value proposition. Prior to Agilon, Spencer led global credit electronic trading and West Coast fixed income trading at Blackrock.

Spencer earned a BA from Vanderbilt University, where he majored in European Studies. He is a Chartered Financial Analyst.

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