US Bond Investors Increasingly Adopting Technology
U.S. bond investors are beginning to use technology more frequently to trade fixed-income products as they look for ways to improve efficiency in an area still primarily reliant on manual processes, according to a study by financial analytics company Coalition Greenwich and fintech firm TS Imagine.
Slow Adoption of Execution Management Systems
Traders are cautiously adopting execution management systems (EMS) in their workflow to enhance execution capabilities in an evolving market, reported Audrey Blater, senior analyst at Greenwich. The fixed-income market’s adoption of EMS is at “a tipping point,” with some traders recognizing that a change in habits is imminent.
Expanded Data-Producing Channels and Legacy Methods
Data-producing channels have expanded over the last five years to include a variety of new factors, such as execution protocols, dealer prices, liquidity scores, and enhanced post-trade regulatory reporting. However, legacy methods like order management systems and phone calls are “seeing” a decreasing portion of the overall market, limiting liquidity and pre-trade transparency.
Study Findings on EMS Adoption
The study found that only 39% of 41 senior fixed-income traders in U.S. asset management firms, hedge funds, and insurance companies reported using an EMS. “While we are still in the early innings of EMS adoption, it’s clear there are meaningful advantages to turning to this technology to navigate today’s markets,” said Blater.