Conference Dailys FILS in Philly Today 2019 - Wrap-up | Page 9

FILS IN PHILLY
THE OFFICIAL NEWSPAPER OF
FIXED INCOME LEADERS SUMMIT 2019
in-depth
Buy-side increasingly taking on price-
maker role in fixed income
SPEAKERS FROM T. ROWE PRICE AND PIMCO TOLD DELEGATES THAT AS THE MARKET STRUCTURE EVOLVES THE BUY-SIDE
CONTINUE TO ACT AS PRICE MAKERS.
T
he buy-side is moving further towards a price
maker role within fixed income markets as
their ability to offer liquidity grows, according to
speakers.
A panel of buy- and sell-side speakers
addressed the ways in which firms must now
approach a shifting market structure and the
provision of liquidity, and detailed how buy-side
firms have taken on a greater role as price mak-
ers as part of the evolution of the fixed income
markets.
Sonali Pier, executive vice president at PIMCO,
explained that the distinction between a price
maker and market maker is important to keep
in mind, and that the firm’s relationship with its
dealers was undergoing an evolution.
“It’s not about some of the traditional mea-
sures that have evolved, especially in the high-
yield market, years ago and are very prevalent;
it’s now more about first look and making sure
that we are in a position where our portfolios are
set up to be the liquidity provider,” Pier said.
“If you look back at the fourth quarter of 2018,
one of the ways we were able to take advantage
of the market was really being in that liquidity
provider seat, whether that was in bank loans
due to the liquidity crunch there or working with
individual issuers to see if they needed to come
to market where we could do a private financing
directly due to the size of our balance sheet.”
Marc Wyatt, global head of trading at T. Rowe
Price, agreed that the distinction between price
and market maker was an important one to
understand what was happening to the role of
the buy-side.
“Our traders are linked inextricably linked with
the investment process; we know where the ana-
lyst needs care…so we can engage the market-
place and let them know, at any level, where they
stand and where we want to participate. That is
most effective when you get dislocations in the
marketplace, where risk is being recycled at a
rapid pace we are able to step in,” said Wyatt.
Conference delegates were also convinced of
the evolving role of the buy-side, with 80% say-
ing in an interactive poll that the buy-side was
increasingly taking on the price maker role.
“It’s not about some of the traditional measures that have
evolved, especially in the high-yield market, years ago
and are very prevalent.”
SONALI PIER, PIMCO
Issue 2
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