DB Autobahn

It has been some time since I’d seen Autobahn (the stand alone version, not what runs via Bloomberg or Reuters or whatever) in action. And I’ve not really ever had a good look at what they offer in IRS.

Well I can say I’m quite impressed. It is a single-dealer platform sure, but it really is the best thing out there in terms of functionality for the e-Swaps market place (sorry to tell you SwapsStream) and, along with BARX, product coverage. I’m talking Outright, Curve Spreads, Butterflies, 18 currencies, RFQ, Streaming Click and Trade, Limit Orders. And the best of all? Unwinds. You find the deal (whether dealt on the phone or electronically) you wish to unwind and open a ticket to unwind the swap there and then. Add in trading API, STP and even the simplicity of e-mail confirmations.

Being single-dealer, albeit one of Waratah’s Tier-1 FI e-Trading dealers, is a massive problem. Multi-dealer is undoubtedly what clients such as Hedge Funds and Tier-1 Funds want. But Deutsche Bank are hardly going to invite their competitors onboard, are they?

So what to do? Do the likes of LiquidityHub and TradeWeb (sorry to leave you out SwapsStream) simply copy the functionality? No trade mark on what Autobahn does, it simply replicates phone trading in a more efficient manner…the whole point of e-Trading.

Indeed TradeWeb does offer curve trades and butterflies. But it remains a Request For Quote driven government bond platform running on architecture from the late 90’s/early noughties. Although I hear they’re looking to jump on the Request For Stream (RFS) bandwagon after Fusion went ahead late last year.

LiquidityHub appears to want all functionality to fit into the RFS model, which counts out the vast majority of it’s Price Makers from being able to do broken dates, unwinds and also butterflies etc.

Time will tell, but certainly a multi-dealer platform that offers Autobahn-like functionality and products would go down well.

 

Markit Buy Everything!

Well, not quite, but after acquiring IIC last month, they’re now going to buy SwapsWire.

 

TradeWeb and Omgeo STP

Press release here from TW.

At the risk of being accused of beating up TW this week…………..why the hell has it taken so long to do this?

 

Single-Dealer: Point-to-point

News of Morgan Stanley using Fidessa LatentZero as a point-to-point for common clients. At this stage it appears it is for cash equities futures and Swaps.

One can only guess they’ll add more products, and banks, in due course.

 

CDS Lists and the Credit “Crisis”

Currently the trading of single-name CDS via electronic means is minimal. This is for a number of reasons, such as Bank support and, still, issues of standardisation.

The CDX and iTraxx Indices are clearly more liquid and do trade in small volume over the likes of TradeWeb, MarketAxess and, of course, as a futures contract on Eurex.

What about lists of single-name CDS? Essentially these are traded by Hedge Funds and Correlation Desks on the back of synthetic CDO issuance. There is a huge amount of benefit to be gained by trading these electronically, in terms of efficient pricing and especially post-trade processing of hundred’s of names.

Q-wixx (part of Creditex) and MarketAxess offer this CDS list tool, however has the current credit market – where CDO’s have been fairly and squarely blamed – killed this type of trading for the foreseeable future? Certainly one can’t see too many new CDO’s (or similar securitised debt), synthetic or otherwise, coming out for a while.

For MarketAxess this isn’t a huge deal as they are and plan to remain cash bond focused, but what about Q-wixx? From what I’ve heard and seen it was a clever tool but limited in that it concentrated on one type of trade in credit derivatives only.

With a parent significantly less cash rich than Goldman Sachs, could it be another victim of the credit “crisis”?

 

EMS: Anyone care at the moment?

Given the markets, this story about Fidessa and LatentZero integrating their respective EMS seems a bit boring…..and it is!

For the sake of completeness…….click on the link.

 

STP: Private Bank Style

The following story discusses the lack of operational automation at European Private Banks, across all asset classes.

http://www.finextra.com/fullstory.asp?id=16642

From a Fixed Income perspective this is quite amazing. The amount of small tickets these guys write means there would be massive potential for long-term savings in processing costs – perhaps the margins they charge clients makes this irrelevant?

Needless to say their counterparties would welcome fewer failed small trades, the vast majority being on corporate bonds.

 

Point-to-Point: Trading & Integration

At the SIFMA Conference earlier this month, there was a panel discussing “Execution Protocols”. Considering the topic & the fact it was held at 4pm after a long day, I guess the nods in the crowd were not necessarily in agreement……yours truly included…..zzzzzzz!

The compare was from FIX so, needless to say, it got a fair share of the airtime. However the most interesting topic discussed was certainly that of the provision of point-to-point services by OMS vendors…in this case LatentZero were represented on the panel & have made no secret of their plans to move this way (see the press release on LatentZero for their latest work in equities).

So what is meant by point-to-point? Essentially an OMS vendor will provide a link from a specific Bank liquidity provider into their Buyside client’s OMS. Thus providing a secure link between bank & client in order to execute trades, send trade ideas, axes etc. It must be said, this would be only for Tier-1 style clients. Those that have the resources to have such an OMS and, more exclusively, a “partnership” style relationship with their tier-1 counterparts.

Of the buyside representatives on the panel, one expressed a concern that they’d require 20 point-to-point links, so would prefer to stick with an ECN – the apparent solution here is that the OMS will “build” a hub……The other buyside had no issue with it, but not at the exclusion of ECNs, so long as they didn’t pay for it. Which raises the question, who does pay for it?

The OMS vendor will hardly do it for nothing, the buyside certainly have no intention of paying for any e-trading or related services – “otherwise we’ll just pick up the phone again” – which leaves the sellside. Now why would the sellside pay for these links when, currently, less than a handful could take full advantage of them anyway? Plus there will be the additional resource required to link to each client etc. I can see the benefits to the buyside (e-access to products & information not currently available, true STP etc) and OMS vendors (added stickiness, fees etc) but not so much to the sellside (“another” e-distribution channel).

If I’m honest, I quite like the concept of point-to-point for the secure delivery of trading in less liquid products, where the multi-dealer aspect isn’t so important, as well as the delivery of sensitive information such as executable trade ideas and axes. But if you are a liquidity provider, why not simply go via your single-dealer portal, be it stand alone or hosted in a Bloomberg or Reuters? Essentially this is where such a point-to-point link would start anyway. Will getting this information into a client’s OMS benefit the bank enough (via STP cost reductions – hopefully) to warrant paying an OMS vendor for the privilege of providing your liquidity to mutual clients?

The answer, to me anyway, seems no!