[ I N - D E P T H
|
B U Y- S I D E
One head of a US-based electronic
trading platform, who asked to remain
anonymous, says there is a difference
between sweeping a blotter and scraping
it—the latter tends to be more offensive to
the buy-side.
“In a sweep a trader makes the decision
which names he wants to push to us or
others,” he says. “A scrape is where you
log in every day and some ATS [alterna-
tive trading system] provider will grab
the entire blotter. There is no discrimina-
tion—admittedly they are not a fan of this
on the buy-side.”
Liquidnet’s Pumfrey believes that blotter
scraping is, however, vital to growing buy-
side electronic trading in the fixed income
market—in the same way as it was with
equities:
“In fixed income blotter scraping is as
important as it was in equities at the start
because when something is growing you
need the match rates. There are a huge
number of different ISINs in fixed income
so it becomes harder to do otherwise.”
There is a further complication to the
current system. Having multiple elec-
tronic trading platforms—as is the case
now—is not making life easy for buy-sid-
ers who complain about the difficulties of
managing the various competing electron-
ic systems as part of their day-to-day pro-
cess. Some investors have been developing
their own proprietary technology to help
with the search across venues. Alliance
T O
B U Y- S I D E
T R A D I N G ]
Bernstein, for example, created ALFA, a
proprietary liquidity management system
which helps it to source the best liquidity
across all its different venues.
“In order to monitor all of the potential
sources of liquidity we’ve developed ALFA
to help traders monitor all of the liquidity
in the market,” says Kurpis. “It allows us
to monitor the market across multiple
platforms and not miss the opportunity to
trade a bond in our blotter.”
In reality, however, most buy-siders wish
there were fewer platforms out there.
Indeed, the next few years are likely to see
a cull of trading venues.
“There are a lot of platforms coming
out—the majority won’t survive,” says
Berwick.
This might well be the solution to push
forward the buy-side to buy-side busi-
ness. But nobody expects this to happen
overnight.
“You need to have a
vast array of different
institutions in different parts
of the world to give you a very
different match rate.”
MARK PUMFREY, HEAD OF EMEA, LIQUIDNET.
Issue 51
TheTradeNews.com
49