Waters Rankings 2020: Best AI Technology Provider—MarketAxess

MarketAxess picks up the award for best artificial intelligence (AI) technology provider at the Waters Rankings this year thanks to Composite+, an AI-powered algorithmic pricing engine for corporate and emerging-market bonds, combining both public datasets, like Finra’s Trace data, and proprietary MarketAxess data.

Nick Themelis, MarketAxess’ chief information officer, says that since launching the platform three years ago, he has learned a lot about using AI in the corporate bond market. The most important thing to realize is that there are no shortcuts, he says—data, technology, and talented staff are all critical elements.

“With those elements now in place, we have pushed to strengthen our AI toolkit by focusing on data organization, cloud deployment, resiliency, and capacity. These enable AI usage in new and rapidly growing applications such as automation, portfolio trading, and indexing,” he says.

The recent market volatility caused fixed-income spreads to widen in a number of markets, and as a result, clients experienced significant difficulty in pricing bonds accurately, Themelis says.

“Our Composite+ pricing tool helped resolve this by providing the market with insight into fair pricing,” he says—the result was not only a better sense of accurate bond pricing and what was expected during those months, but also better liquidity by giving participants and issuers “the confidence to come to market.”

MarketAxess is now focused on using the data it already has on bond markets to develop additional tools to help clients stay informed during the pandemic. The company will be looking at developing its machine learning and algorithmic capabilities, as well as focusing attention on municipal bonds as they become increasingly electronic.

“We also recently acquired LiquidityEdge, now known as MarketAxess Rates, which is a US Treasury trading platform, to round out our fixed-income offering,” Themelis says. “As a part of that, we are working on enhancing our hedging capabilities for credit transactions.”