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.