A major infrastructure overhaul to the MTS trading system, Telematico, which supports around 30,000 trades per minute, was initiated in 2004. This included exchange auctions for the Italian Treasury (Concambio). When complete it will markedly increase system capacity and efficiency.
Designed to address the MTS B2B market’s growing capacity needs and to further increase efficiency while simplifying its architecture, the new TradeImpact technology will initially increase system capacity by 50 per cent, but allows for capacity to be further increased as per the needs of the market.
“TradeImpact has a modular and configurable design, which will provide for the addition of new trading features and the further development of existing software at a low cost and with short lead times for end users,” says Mr Mulvar at MTS in London. Further, the new software offers new trading modules such as Primary Auction and
Request-For-Quote engines for all MTS markets.
The front end for Telematico On-Line (TOL) was successfully replaced last October with new features allowing easier access to multiple MTS markets, thereby fully supporting a strategy aimed at encouraging cross-participation.
eSpeed, a leading US developer of electronic marketplaces and trading technology for the global capital markets, transacts over $40,000bn a year in fixed-income trades. The firm trades products ranging from its foundation business in US treasuries around the world, US agencies, European, Canadian and Japanese government bonds right through to futures and foreign exchange. Plans are also afoot to introduce US repo in the fourth quarter of 2005.
Mr Saltzman confirms the firm will “continue to seek out opportunities” to apply its fixed income expertise, proven technology and access to liquidity in multiple, relevant product areas with the aim of creating even deeper and more liquid global government bond markets.
“Our philosophy has always been to leverage and scale eSpeed’s proprietary technology, which we believe is our competitive advantage. No other interdealer can match our innovative and proprietary technology. As such, our strategy in the foreseeable future will be to leverage and scale the technology by providing innovative and customised trading tools for the financial services community to more efficiently execute transactions,” Mr Saltzman adds.
Following the MTS transaction, eSpeed is in the process of evaluating how it intends to grow, either organically or through further strategic initiatives. But Mr Saltzman remains fairly bullish on prospects for the European market, seeing “significant opportunities“.
Illustrating how the firm continues to innovate electronic fixed-income trading, eSpeed and Nextel Communications introduced the first wireless bond trading application on the Blackberry platform this June. This enables eSpeed’s Wireless US Treasury bond
trading platform to be available on the BlackBerry 7520.
Licensed bond traders are now able to move about the office or attend meetings while continuing to manage market risk and effect trades wirelessly with all the functions of their desktop with execution on Nextel’s network. Views can be customised to monitor two-, three-, five-, 10- and 30-year instruments, settings, trade histories and active orders, with standard industry formats and customary eSpeed desktop looks and functions.
SuperQuads functionality on eSpeed allows traders to maximise their screen view. Users can customise their screen as they subscribe to multiple instruments across different markets, with information able to be seen in a variety of formats to monitor key elements like market depth and activity. Windows can be zoomed and collapsed without disappearing.
BrokerTec, which was acquired in May 2003 by ICAP, the world’s largest inter-dealer broker, is thought to have recently established a 60/40 edge over eSpeed in on-the-run bonds - with bigger leads elsewhere.
Originally founded in January 1999 by a consortium of seven European and seven US financial houses to create a global fixed-income wholesale trading platform, today’s product base covers some 20 fixed-income markets, both in cash and repo. From an electronic trading point of view, BrokerTec is the biggest system of the ICAP trading family of electronic trading systems and has around 350 customers worldwide.
The platform is built and supported by technology from Sweden’s OM Technology Group, and in the past year, BrokerTec claims the uptime has been 99.99 per cent. The system is open 23 hours a day for various markets - from Tokyo through to New York – where trading can be carried out on exactly the same screen all day.
The link-up with the ICAP voice brokers offers BrokerTec’s clients improved access to liquidity across a large range of fixed-income products. The upshot is that in each distinct market, dealers have the choice of dealing electronically or through the brokers.
While the average daily volume traded through the platform averages $400bn-$450bn (single counted) a day across the electronic trading systems, since February 2005 the figure has hit $500bn. Interestingly, as a whole ICAP currently executes more volume today electronically than it does through voice, though less than 200 people work on the electronic platforms compared to over 1,000 on the voice broker side.
The functionality of the BrokerTec platform is appreciated by many traders, based on its strong liquidity, ease of use and link to post-trade processing. Unsurprisingly the platform wins its share of industry awards.
BrokerTec Europe is the largest electronic inter-dealer broker to offer gilts trading, with Gilt-Edge Market Makers from ABN Amro to UBS using the system. The system also provides premier execution in European government bonds and Basis, with a cost effective and streamlined solution linking to STP, as well as a highly configurable front-end screen. Its repo platform in European government bonds was launched in 2000 and quickly gained significant market share.
And, in the US treasuries space, BrokerTec promotes liquidity for both active (‘on the run‘) and ‘off the run’ bonds, with commission only on aggressive trades. Product features include warning windows that help to reduce the risk of trading errors, a special BrokerTec keypad to transact actives at speed, and a customisable front end with the option of API access. Other markets covered include US agencies, US repo, basis and mortgage securities.
Most products traded on BrokerTec are all highly commoditised, characterised by huge volumes and narrow spreads. Another ICAP electronic trading platform, ETC, is cross-connected to BrokerTec and is mainly used for the Eurobond market and off-run US treasuries.
Prices are displayed on the screens and can be negotiated and traded by phone with the voice broker or traded directly on the screen in some of the markets. Electronic trading in the non-government bond markets is gaining pace and plans are progressing to enable traders to execute electronically in most markets in the near future.
ICAP’s voice brokers can also place proposed client bids/offers on BrokerTec’s electronic platform, if this is deemed suitable - so illustrating their hybrid model.
