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The evolution of data in the fixed income market
With ongoing regulatory changes and the continuous push for digitalisation , the fixed income market is poised for further evolution in the coming years says Anya van den Berg , VP of data and analytics at Deutsche Börse .
Over the past few years , the fixed income market has experienced a remarkable evolution in both product offerings and the utilisation of data-driven insights . As the financial landscape rapidly changes , driven by technological advancements , shifting investor preferences , and regulatory changes , the fixed income market has adapted to these dynamics to better serve market participants .
The integration of ESG factors into the fixed income market has been one of the most notable trends . With climate change becoming a pressing issue globally , there has been a surge in the issuance of ESG-centric bonds , including green , social , and sustainability bonds . These all serve as a means for issuers to raise capital for projects aligned with ESG objectives , while catering to the growing demand from investors who seek to align their investments with sustainability goals .
In addition to this , fixed income issuers have increasingly embraced innovation by structuring bonds tailored to specific investor needs . Structured bonds , with features such as adjustable coupon rates or embedded options , allow investors to better manage risk and exposure to the ever-fluctuating interest rate adjustments we have all experienced in recent times .
Lastly , exchange traded funds ( ETFs ) in the fixed income space have also continued to proliferate , as they provide exposure to niche fixed income segments such as emerging markets , high yield , and municipal bonds . These ETFs offer investors a convenient way to access a diversified portfolio of bonds while benefiting from intraday trading and transparency .
Aside from the above trends , the value of alternative data sources within the fixed income market are also worth noting . Over the past few years , market participants have started incorporating non-traditional data like satellite imagery , social media sentiment , supply chain data sentiment and online transaction data into their analysis . These alternative datasets offer unique insights into credit risk , issuer performance , and macroeconomic trends , enabling investors to make more informed decisions . Deutsche Börse has thrown its hat into the ring in this regard and developed datasets in partnership with Clearstream who are a leading International central
54 // TheTRADE // Q3 2023