[ F I X E D
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S U M M I T
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SENIOR BUY-SIDERS MAKE
CASE AGAINST EMS IN
FIXED INCOME
CARL JAMES AND YANN COUELLAN PERSUADED
SOME DELEGATES THAT THERE IS NO NEED FOR AN
EMS IN FIXED INCOME TRADING.
T
wo heads of desks at major
asset management firms have
argued against the use of an exe-
cution management system (EMS)
in fixed income markets, claiming
to have instead built similar and
efficient tools internally.
Carl James, global head of fixed
income trading at Pictet Asset
Management, and Yann Couel-
lan, head of FICC trading at BNP
Paribas Asset Management, made
the case as part of an Oxford-style
debate.
Delegates were asked if the
fragmented nature of fixed income,
requiring continued high-touch
trading, means an EMS is not a key
prerequisite for the buy-side, with
42% of the audience in agreement.
By the end of the debate, almost
half of the audience agreed with
James and Couellan.
“I am against the EMS in fixed
income because it adds a layer to
the process which is completely
unnecessary,” James said. “Within
our own order management system
(OMS), we have around 700 days
of trading data that we can review
ourselves for no cost and without
the help of an EMS.”
Those arguing the case for
the EMS in fixed income - Joeri
Wouters, senior fixed income
dealer at KBC Asset Management,
Ivan Mihov, head of buy-side fixed
income EMS at Axe Trading, and
32 // TheTrade // Winter 2018
Andy Mahoney, head of EMEA
sales at FlexTrade - instead stated
the tool is imperative for evidenc-
ing best execution processes,
generating alpha and aggregating
data, while building a similar tool
in-house is a near impossible and
costly task.
“Alpha doesn’t just happen at
the point of execution, it’s about
pre-trade analysis too, and for me,
the EMS is not the place you want
to have that discussion,” James an-
swered. “We have built a pre-trade
tool which is embedded into our
OMS, with our own rules that gives
us our own unique data. That is
different to everyone else who does
use the EMS, which gives us that
edge and generates alpha. EMS is
old technology and the buy-side
should be looking forward.”
KBC Asset Management’s
Wouters, countered that conversa-
tions in the past have often focused
on the problems around handling
data and creating a comprehensive
best execution process, but the
EMS is, in some cases, the solution
to those problems.
“The development of a compre-
hensive EMS in fixed income is an
almost impossible task,” Wouters
added. “The EMS adds value to my
high-touch trading, low-touch trad-
ing and at the same time, it frees up
my time to focus on the data.”
BNP Paribas Asset Management’s
Couellan detailed that his desk
has built various tools which leave
him with no need to implement an
EMS, while James added that the
EMS is a tool for equities and not
for fixed income, which need to be
handled as two very different asst
classes.
“Today’s EMS is just adding to
market impact and at some point it
is affecting my quality of execu-
tion,” Couellan argued. “We haven’t
built an EMS ourselves, but we
have built a tool to monitor market
value with post-trade analytics, etc.
As a buy-sider, if there is choice,
I would say we need a tool that
differentiates us from the compe-
tition. The tool we have built was
very cheap to produce and suits
my trading needs which are very
specific.”
“Alpha doesn’t just
happen at the point of
execution, it’s about
pre-trade analysis
too, and for me, the
EMS is not the place
you want to have that
discussion.”
CARL JAMES, PICTET ASSET
MANAGEMENT