Buy-side Perspectives Issue 4 - Page 13

Fixed income The buy-side must take control of its own destiny. The time has come to start trading electronically, especially in the UK. Organisational reulctance to embrace electronic trading must be overcome but views currently diverge over the future share of technology. In Asia, there is a palpable sense that the fixed income market has grown significantly in the last three years. A growing proportion of trades are executed electronically, but the bulk of block orders are still done by phone or chat tools. Despite the rise of newer electronic fixed income initiatives, there is a degree of scepticism among the buy-side about whether or not these will be able to mobilise the necessary liquidity to succeed in the medium to longer term. K&KGC debates in Asia and London have indicated that the top themes for the buy-side this month are the need to reset price expectations, especially for block trading; the need for the buy-side to take on a price making role, especially in the UK and France; the need for aggregation, for example a single interface for the multiple platforms and EMS tools necessary; interconnectivity and data standardisation; and the need for discretion, i.e. the PM to trust the trading desk to make decisions to trade over a longer period of time to gain more alpha and reduce market impact. In addition, the unbundling of fixed income may lead to the segregation of trading and investment functions within firms. One of