Most people agree the future of FI/Derivative e-trading is bright. Certainly myself included.

However, is it really at the cutting edge? Relative to both e-trading in other products and indeed the Bond/Derivative markets themselves.

Quite simply the answer is no.

See my post from January calling for a “breakthrough idea” to truly make FI e-trading a major part of the markets.

This segment remains behind FX and Equities (without really catching up over the first half of the year), there is a serious risk that there will be, soon enough, only two serious competitors in the ECN space and they are data vendors where FI e-trading is a small, but hopefullyimportant, part of their overall business.

The Banks are wrestling control back with the likes of LiquidityHub and Project Fusion. As it stands, LiquidityHub will be a rather simple, fee paying system. Or maybe that’s a bit harsh?

Even so, you can count the Banks leading the charge on one hand.

Meanwhile financial innovation in the markets is at unprecedented levels and the only “e” products are those that are very mature (government bonds, retail credit and now swaps).

Talk of FI exchange models, the blurring of buyside/sellside, no more dealers/traders all driven by e-trading; has been distracting in my view. Are the players thinking about the tryline and not the hard yards that need to be put in to get there?

So where is the bottleneck?

Buyside protecting jobs or having a “if it ain’t broke attitude”?

Sellside using resource to chase near-term $ in strutured products etc (BTW, if I held shares in a bank that didn’t, I sell ’em!) and traders/sales also following the buyside line of thought?

Or, as Holky may agree, a lack of innovative courage from vendors (ECN’s, OMS, EMS etc)?

All of the above? Yup.

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