Holky has brought attention to a recent Euromoney piece on “The coming revolution in fixed income e-trading”.

The article sees LiquidityHub and the likely (?) break up of the current MTS model in the inter-dealer space as the catalysts to the “revolution”. Whilst I totally agree that much of the gains in FI e-Trading have been incremental, I don’t see these two events providing the revolution (I wish they were), rather another stage in evolution.

One reason is that the idea of B2C entities, such as LH and TW, gaining opportunity in the B2B or inter-bank market is a bit old. Old because it is already happening and has been for years! I understand that 50%+ of TW EGB volume is done with banks as the “client”. Now I’m not talking Citi, GS, BarCap etc but tier-2 and below banks. That is why MTS established BV in 2001 to try and halt the MTS volumes that TW were getting.

This is fine, if the “Street” consider you a client and the spreads are tighter on a TW/BV than an MTS and there are no trading fees…..why not! But I don’t see Global Market Maker trading with Global Market Maker via these mediums in the near term. So little will change in terms of how business is done, just where.

Secondly, LiquidityHub, as it will appear intitially, looks more evolution that revolution. Very simple, as it needs to be for a new system, but not really going to change how business is done in a hurry.

Interestingly only one comment, from Stu Taylor at UBS, covers client-to-dealer connectivity (incl. STP). Surely this area could go through a little revolution?