Fixed Income special report
Click here to download the PDF
Bonds Automation is About Quality, Not Speed
If you look up "bond" in a dictionary, the first definition refers to restraints designed to hold someone prisoner. The second describes a "binding" covenant, with the explanation of fixed income instruments some way down the list. But it's worth keeping these definitions in mind: Fixed income assets were never designed to be traded in a high-frequency environment-they were intended to be held in return for agreed payouts over time-but are now undergoing an automation revolution.
High-frequency bond markets may still be some way off, even if more attention is now typically paid to a bond's price than its yield. But that isn't stopping firms wanting to apply more automated models to the most liquid classes of bonds. Automating basic trade flow saves money, allows firms to focus on more complex deals, supports the growth of higher-frequency trading and enables firms to offload data intensive and time-sensitive strategies to machines that can execute trades faster.
As complex bond pricing becomes more automated, compute power demand intensifies, while for the most liquid classes, reducing latency to the execution venue becomes more important. That's where datacenter providers like Equinix come in, providing the space and connectivity for trading firms, and often hosting the matching engines of the marketplaces themselves. In fact, as fixed income moves more to an exchange-like, centrally-cleared order book model, these datacenters will become the key meeting places for traders, replacing the handshake, phone call, or electronic request-for-quote model.
These more transparent, exchange-like marketplaces will by their nature generate better quality market data. But the need for more transparent, frequent and better-quality fixed income pricing is ubiquitous. Whether you trade once a day or multiple times a second, knowing that the price you are trading on s timely, accurate and executable is key, so that the pre-crisis gaps between valuations and reality are never repeated.
Of course, the fixed income markets include a range of unique features and complexities. One such additional complexity is the attribution process, which requires that firms have a firm grasp of all relevant data points, and implement the correct processes and technology platforms, as outlined by Christophe Volard of BI-SAM later in this report. And as the fixed income markets inexorably move towards a model of increased automation, these systems choices will become more important to a firm's success in this evolving electronic landscape.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: https://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact info@waterstechnology.com to find out more.
You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@waterstechnology.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@waterstechnology.com
More on Data Management
LSEG ‘acted in bad faith’ in MayStreet acquisition, new court filing alleges
Lawyers for Patrick Flannery have responded to LSEG’s motions to dismiss the suit for fraud and breach of contract related to the 2022 acquisition.
Bloomberg enhances feeds, Standard Chartered and TP Icap partner on digital assets, and more
The Waters Cooler: LSEG and ASX partner to modernize derivatives platform, MSCI acquires two companies, State Street bolsters data business, and more in this week’s news roundup.
Wilshire Indexes shutters, transfers operations
Investment firm Wilshire has told clients that production and publication of all indexes not already sold or returned to the asset manager’s ownership will be discontinued.
After Dora, ITRS pursues agentic AI for autonomous monitoring
Chief product officer says firms can bolster data resilience with new forms of AI.
Geopolitics hits Middle East datacenters and firms’ operations
The IMD Wrap: Wei-Shen examines recent disruptions to AWS datacenters in the Middle East linked to the US-Israel strikes on Iran, and what it means for data and businesses operating in the region.
CME rankles market data users with licensing changes
The exchange began charging for historically free end-of-day data in 2025, angering some users.
Data heads scratch heads over data quality headwinds
Bank and asset manager execs say the pressure is on to build AI tools. They also say getting the data right is crucial, but not everyone appreciates that.
Reddit fills gaping maw left by Twitter in alt data market
The IMD Wrap: In 2021, Reddit was thrust into the spotlight when day traders used the site to squeeze hedge funds. Now, for Intercontinental Exchange, it is the new it-girl of alternative data.