UBS Widens Liquidity Pool for Fixed Income with TradingScreen Partnership (Q&A)

Trading platform vendor TradingScreen recently announced the availability of the streaming liquidity of the UBS Price Improvement Network, Fixed Income (PIN-FI). As a result, TradingScreen's buy-side clients now have access to more than 8,000 corporate names in US dollars and euros, which are actively priced on UBS-FI, which provides an alternative source of fixed-income liquidity.

BST spoke with Stu Taylor, head of UBS matched principal trading for fixed income, and Jean-Philippe Malé, head of over-the-counter (OTC) products at TradingScreen, about the partnership.

Taylor says this is a big development for the bank because he estimates that only about 10 percent of assets in fixed income are held by the dealer community, with the other 90 percent falling to the buy side. So PIN-FI will provide a much more "systematic" aggregation tool for that liquidity pool, he says.

BST: How will this release help clients to achieve best execution?
Stu Taylor: With this new process with the UBS Price Improvement Network, in combination with TradingScreen, clients are able to not just take prices from dealers, which may or may not be at the level they executed, but they can actually leave target limit inquiries in the market.

What that does is allow them to advertise their targets to other clients on—in this case, the UBS Network—and therefore they can achieve execution often inside the bid–ask they may get from the dealer community. So it opens up a lot of the liquidity that previously was unavailable to them.

BST: What other advantages can clients expect?
Jean-Philippe Malé: The partnership between UBS and TradingScreen is a huge improvement for clients because we effectively handle all the workflow and the connectivity, as well as risk management and position-keeping systems in the background. We capture all the trade requests from the various desks and portfolio managers and expose that on our execution management system (EMS).

We also allow them to visualize the entire market community that is available through UBS' network, and allow users to send inquires to UBS at various price levels, which allows them to drive the market in the direction they effectively feel is in the best interest of their customers.

Taylor: It also allows for a far broader range of securities to be priced. A lot of the securities are not always so actively market-made, which means that clients will often struggle to get price discovery and efficient execution. This way, clients can essentially post up the inventory they are looking to buy or sell, and can advertise their price.

BST: How did this partnership come about?
Malé: We've been working with UBS since 1999 on all the different asset classes: We are connected on equities, futures, options, and most recently on fixed income.

BST: What are you working on for the future?
Taylor: Right now, we are live with our live-inquiry market, but we have also developed a block-trading platform for large-sized clients’ inquiries. We're already in progress with integrating that product, which is currently a web-based platform, into to the TradingScreen interface. That is something that's coming. The advantage of that is the size of trades should increase as PIN-FI Block Trading limits information leakage and this is essential for clients executing larger tickets.

Malé: We are integrating the block markets that UBS is coming up with and we will have this offering live on our networks in the next few months.