Related Content

Tyler: Hi, I’m Tyler Wellensiek, Head of Fixed Income Market Structure at Barclays. My team recently completed our annual Fixed Income Market Structure Survey of clients around electronic trading trends in fixed income markets. To discuss the results, I am pleased to be joined today by Zornitsa Todorova, in our Fixed Income Research group who has also been doing a lot of fantastic work around electronic trading trends in fixed income.

So Zornitsa, you’ve recently looked at public data around electronic trading. What can you say about your findings?

Zornitsa: I think it’s really fascinating to see what differences there may be between the public data that we analyse, and what clients are doing…or thinking of doing in the future.

For example, our latest study shows that electronic trading in government bonds on both sides of the Atlantic is at 70%. But it is a very different story when we look at other asset classes such as Credit, which has some catching up to do, and where electronic trading is currently at 50%. So I’m wondering if this is similar to what your client survey shows?

Tyler: Absolutely, so we’ve been asking clients about their levels of electronification for several years, and it’s been a consistent upward trend and that’s something we definitely saw in this year’s results.

Zornitsa: What we see in the data is that there me be, actually a ceiling actually of 80% of electronic trading in both Rates and Credit.

Tyler: 80%’s a pretty big number, but I also am also tempted to ask what’s in that 20% and is that truly structural or is there more we can do to electronify those spaces.

But maybe looking at Credit, where at 50%, per your numbers, there is a lot of room to expand. I know you’ve done work on Portfolio Trading. How might that drive further electronification in Credit markets?

Zornitsa: Our latest Research report on the topic of Portfolio Trading shows that Portfolio Trading is really transforming Credit markets. It’s transforming the way investors are sourcing and accessing liquidity.

We have a new Portfolio Trade every seven minutes now, especially in the US market which is quite frequent, given that last year it was…the pace was twice as low.

Tyler: That’s been fantastic growth in this space. Our clients are also telling us that the way they are using the product has evolved quite clearly something that used to be about small tickets and now has many more use cases and also many more diverse sets of analytical tools to help clients with dealer selection and portfolio construction.

Zornitsa: That kind of conversation doesn’t really surprise me, because I think it’s easy to see the potential for Portfolio Trading to keeping adding value to clients, especially around Factor Based strategies, which for a long time have been a staple good in Equities but we don’t see that level of adoption in Fixed Income. So we definitely this this is going to be the next big evolution in Fixed Income electronic trading.

Tyler: That sounds really interesting, it sounds like we have a lot to watch in the years ahead.

Zornitsa: Indeed we have.

Tyler: Excellent, well thank you for joining me. If you’re interested in learning more about my team’s market structure survey, please visit barclays.com/ib