Hedge Fund Huddle podcast

Demystifying the evolving landscape of fixed income

Episode 6, Season 1

Credit and rates are certainly making headlines lately for many reasons. But how much do we really understand about how the fixed income market operates? In this episode we are joined by Dan Eckstein, Global Head of eRates Product and US Head of eRates Distribution, Barclays, Matthew Coupe, Global Head of Cross-Asset Market Structure, Barclays and Emil Parmar, Director of Credit Trading Solutions at LSEG. Listen in to their eye-opening discussion about the future of this complex asset class.

Host: Jamie McDonald

  • Jamie: [00:00:01] Hello and welcome to another episode of Hedge Fund Huddle. I'm your host, as usual, Jamie McDonald. Now, in this episode we are going to be focusing on the world of credit and fixed income. I think this is an episode which is long overdue and for so many reasons it's important to be demystifying the world of credit and how credit is trading right now. So this will be an interesting episode for everyone. Before we get going though, just a bit of housekeeping. If you are enjoying this series, please do give us a like and a follow on your preferred platform, wherever you get your podcasts. And if you have any ideas or comments, we want to hear from you. We'd love to hear from you. Please email us at fmt@LSEG.com. That's fmt@lseg.com. Any ideas for future shows, future guests or any feedback on the episodes you've heard so far. So, without further ado, if you've been listening, you'll know that I'm much more of an equities guy, so fixed income and credit is something that's a little alien to me, but in 2023, for so many reasons, credit is coming back into focus. Not only do we have the Fed warning, we could be heading towards a credit crunch. Short term rates are more attractive than they have been for a while and for so many reasons,

    Jamie: [00:01:09] there's many buybacks going on, which is going to affect liquidity in the world. And maybe just the most indicative of all is that me, an equities guy, the closest I'd ever got to trading debt was basically a bond ETF. Now here I am buying US Treasuries. So, you know, I'm not usually a pioneer when it comes to investing strategies, but if I'm looking at buying US Treasuries, then I'm sure that many other people out there are doing the same. Another reason why the timing of this podcast is very relevant is June 21st is the Fixed Income Leaders’ Summit in Nashville. All three of our guests today will be there in attendance. So if you are also going feel free to get in touch with them and maybe you can steal a few minutes of their time. On today's show, we have Dan Eckstein, he's Global Head of eRates Produce and US Head of eFixed Income Distribution at Barclays. His colleague is also joining us, Matthew Coupe, he’s Director of Cross-Asset Market Structure. And our third guest is Emil Parmar. Emil is Director in Credit Trading Solutions at LSEG. And we are thrilled to have all of them with us today. Hello, guys. How are you?

    Matthew: [00:02:11] Hey, Jamie. Thanks for having us.

    Jamie: [00:02:13] Well, Dan, perhaps I can start with you. Now, I know you are much more focused on the tech and product execution side of rates and fixed income trading, but as simply as you can, what do you specifically focus on, who are your clients and what kind of solutions are you looking to provide to them?

    Dan: [00:02:28] So as you mentioned, I wear two hats at Barclays. First, I'm the Global Head of our eRates Product tTeam and what that's responsible for is essentially managing the global book of work that is responsible for delivering electronic trading solutions to not only our customers by which they connect to Barclays through electronic channels, but also to our trading desks internally for ways that they access their own liquidity needs and hedge their own risk. I'm also the Head of our Fixed Income Sales Team, and what that allows me to do is manage the relationships that we have with our customers for the portion of their business that they're doing electronically, and that involves talking to them about different workflow solutions that they're looking to integrate, but also providing a lot of data and analytics to measure Barclays as a counterparty. So we do engage in a lot of data analysis for them as well.

    Jamie: [00:03:16] Okay, great. Thank you. Dan. Matthew, if I could turn to you next. We've had a few discussions before, and I know you wear many hats, a lot of them on planes by the sound of it, given how much traveling you're doing. But what's your day-to-day? Who are you meeting with and what's your role at the company?

    Matthew: [00:03:30] My role is slightly bizarre compared to a sort of a standard sort of markets role. So you said I'm Global Head of Cross-asset Market Structure, which means I cover all asset classes. And it kind of has three pillars to it. One is I'm there, I engage with regulators, policymakers, politicians to when we're having a change around market structure to engage and give a practitioner's view about what's going on and, to look at the practical impacts of what might happen and change to that. The second part to that is I sit within sales and trading division within markets and I am there to look in terms of strategically what happens when we have changes, looking at what's happening and to say, Hey guys, there's a big change here, we need to look at this. We need to see what we need to do, what we need to adjust. And then thirdly, as with Dan, is to work with Dan and also the other asset class teams to go and speak to clients and act as a resource for them around that. I think critically, the key thing that you need to look at is what is market structure? All too often we get labelled as the reg geeks. Yes, I am a reg geek. I do love reg, but critically, actually market structure can be a lot of different things and a lot in terms of how we evolve and integrate into the market. And when you look at the discussions and debates, we're having here, it's all about how you're executing and how liquidity is formed as well.

    Jamie: [00:04:40] Matthew, if I can follow up with you, when you're meeting with policymakers, politicians looking into changes in regulation, are they asking you for feedback from clients? In terms of what are clients talking about in the world, what solutions do they want? Or is it more clients asking you how do you think regulation is going to change? Or is it a two way thing?

    Matthew: [00:04:58] It's a bit of a two way thing, to be honest. I mean, particularly when I go to speak to regulators, one of my first thing is, is that I think when we're looking at regulatory change, what we need to do is develop markets in the right way, in an effective way. So critically, we should be driven what's the right result for the end investor? And that's the first question that I live and die by. And so I always say to regulators, please go and speak to the biases, please engage with the buy side because critically we need to have that sort of check there. But you know, I obviously represent, the sell side and I sit on a number of different trade associations and industry bodies where I will be sort of wearing my neutral industry hat or my hat to where I'm doing, but also be engaging from a Barclays perspective and seeing what our views are around this. I think, critically, all too often, market structural changes and particularly regulatory changes get pushed to the last minute in terms of industry feedback. And I think the critical thing is to have that interactive, engaging debate. And I think the one benefit of my role, which has been great within Barclays, is that that enables me with my client facing element. And what Barclays really wants to push me to do is actually make sure we're having that education and that engagement, which leads to then better dialogue within regulators as well. So you get a much wider picture in terms of any potential changes they're looking to make.

    Jamie: [00:06:04] Great. Thanks. Well, Emil, let's bring you in at this point. You've been in the fixed income world for a while and now you're, as I say, director of Credit Trading Solutions at LSEG. So if you don't mind, could you just give us your own sort of personal interpretation of what's going on in the bond market right now? As I was saying, what we're trying to do in this episode is kind of lift the lid of fixed-income trading in the world of credit trading and see how it works and how it operates. But it’d be interesting to get your view on where we are today.

    Emil: [00:06:30] Sure. In the trading solutions space we have a natural lean to focus on pre-trade analytics and workflows, but also at trade execution when it comes to OTC for electronic trading. We also spend a lot of time in the post execution space, particularly when it comes to analytics and pricing, and that's where we work quite closely with our analytics and pricing colleagues to work on projects such as enhanced credit curves and liquidity analytics. So when it comes to the state of the bond market, really what I think is being asked for more than ever these days is to elevate meaningful data. So anytime covenants is mentioned on an earnings call or we're seeing spreads widen as it's largely expected given the stickiness of inflation, we're also seeing financing starting to tighten up a bit given what's happening in the banking sector. It really is a mixed bag because we're seeing outflows in high yield, we're seeing downgrades starting to outperform upgrades. Some people, as they like to call it, the rise of fallen angels, but there's also a flight to quality. A lot of investment grade did well during the pandemic period to show our balance sheet and get their financing in order. So it's probably going to be an interesting ride as there's a lot of turbulence to be expected. But credits are going to have the wherewithal to withstand some of this period. It'll be interesting. So it's not quite linear, but we're looking forward to it.

    Jamie: [00:08:01] Okay. Thanks, Emil. There potentially lies a lot of opportunity. Matt coming back to you and if I may, come from an equity point of view because that's really what I spent my life doing. When I think about how equities trade, it's like I always think of it as all to all, ultra liquid, everything I traded was on an exchange, I never really even thought about illiquidity really. But when I think about fixed income and how the way it's traded has developed over the years, including electronic trading, I always thought of it as much more nuanced. The over the counter, by appointment there was always much more nuance to the actual way it traded. So I just wondered if you could just help us out, talk a little bit about how the progression has happened within fixed income trading, where we are today and how things are trading today.

    Matthew: [00:08:45] Yeah, sure, Jamie. I mean, I'm an equity guy a long time ago now, but I was involved in the creation of dark pools and fragmentation and when high frequency trading was all kicking off. And I think you'll agree equities isn't as straightforward when you're trying to source that liquidity because you've got the high level of fragmentation and kind of how do I trade, how do I participate? But you're right in the sense that there is a large proportion done on an all to all or on an order book driven model. But critically, I think it's important to recognize in equities there is still principal liquidity out there. You can still come in, do that OTC trade in equities. But you know, the majority is now going across in terms of either care orders or through algorithms being executed into this increasingly complex, fragmented market. That is where we got with equities, as you said. In fixed income, we're in a slightly different story, but it's a story of evolution and there's different contexts to come from it. So critically, the structure of the market is such that you are dealing in a principal capacity because for a large majority of fixed income instruments, whether it be credit and rates, you are needing balance sheet and to be trading on risk, you're needing facilitation for that. When you're looking at conditions, a large proportion of the time is the buy side possibly will be one side of the market. There might be other sides which are the other side and that does happen. But I think the large amount of time you are going to need risk and facilitation from a dealer. So that doesn't really facilitate that kind of order book model that you have in equities. So we have this RFQ based approach.

    Matthew: [00:10:13] It’s quite straightforward when you cut out the acronym. I think all too often we use way too many acronyms in this industry. So RFQ is a nice, simple one, request for quote, which even for us, some of us equities guys, RFQ is still known.

    Jamie: [00:10:25] We can just about handle that.

    Matthew: [00:10:26] Yeah it’s a good one. So, when we're looking at that, you come in and you request a quote from a named counterparty and they give you a quote for that trade and then you agree to do that trade. Now that is fixed income quite a few years ago now, in terms of just having a plain vanilla RFQ.

    Jamie: [00:10:42] But can I ask a quick question on that. So once that trade happens, how quickly is that trade reported to the market? How quickly does that price transparency happen?

    Matthew: [00:10:52] So transparency is a key thing that's going on for quite a long time. I we're looking at the US market in credit, we've had the evolution of TRACE. TRACE has an element of as a large amount of price, real time discovery, but also there's a delay in terms of the volume that's actually been traded or the notional traded in that credit instrument. And that is going through a change. We've also had MiFID in Europe where we're having a lot more transparency, there's a lot of evolution and changes there. And we're also seeing proposals in the Treasury market to actually introduce transparency as well. So we're seeing a lot more data coming out. We're seeing clients becoming more data hungry, particularly going back to what Emil was saying in terms of when you're looking at analytics and you're looking at the understanding of how liquidity shaping out and trying to be able to source and find liquidity, clients are wanting to be more data hungry when you've got more data being delivered, whether that be public data or private data. So essentially when you're seeing that with clients, you're seeing a lot more automation and complexities in terms of differing protocols, in terms of how that operates, which is, I think, a nice little opening for my colleague Dan.

    Jamie: [00:11:50] Dan, let's turn it over to you.

    Dan: [00:11:52] Sure. I think you guys touched upon some really interesting thoughts here about how fixed income differs from equities. But I think it's really worth noting just how electrified the fixed income market has become over the last couple of years. One of the things that my team does with Matt is every year we put together a global fixed income market structure survey. We're in the midst of compiling the results from the 2023 version of this. This is actually what we'll be speaking to next month at the Fixed Income Leader Summit. But Matt and I have begun to take a look at some of the early results. And I think it's it may be interesting for your audience to hear one stat that we took away from that, which is that two-thirds of respondents in rates cash said that they do at least 75% of their tickets electronically. Now that is a high amount of tickets. If you were to be doing that amount of your workflow by what Matt described in an RFQ fashion, which is pulling up a ticket, filling it out, sending it out for quotes and responding, that's a very slow process. So what Matt is touching upon, if you're going to be doing that many tickets, which oftentimes is hundreds if not thousands of tickets, you have to be adding a certain amount of automation to that. So that is really one of the common themes that Matt and I and our teams have really focused on over the last couple of months,

    Dan: [00:13:08] the amount of automation and sophistication that is being brought to the fixed income market. RFQ as Matt mentioned, is something that has existed for two decades, but it has begun to evolve and the way that we're really seeing it evolve with our customers today is that they're taking something that traditionally is very manual and they're layering on top of it, a rules engine. So if they have certain instruments that they deem to be sufficiently liquid or if there are certain trade sizes that are small enough that they can execute at a reasonable price, they can just set certain parameters like what dealers am I going to go to, what am I looking for in the pre trade environment, how do I want to determine where I will execute this trade, so on and so forth. You could pre-program those rules and instead of those orders coming in from the portfolio manager to a desk where they're manually executing those trades, it's fired off via these preprogramed execution rules. So we've been working with our customers very closely to understand what's important to them, how they're using these tools and what they're expecting from their dealers, like Barclays to provide a good service in response to this automation. So that's really been one of the key themes that we've identified over the last couple of months.

    Jamie: [00:14:18] And if I could ask you just on that, Dan, the automation and programming within electronic trading for fixed income that's happening on the buy side or the sell side? For example, when I was at Point72, we were doing our own trading to begin with, but essentially calling broker dealers like Barclays or Goldman. But as the years went on, we had in-house traders who were using our. you know, I can't remember which platform it was, but using algorithms to go directly to the market without having to go through the broker dealers. So how does it work on the fixed income and credit side of things?

    Dan: [00:14:48] Yeah what we've noticed is that a lot of the major venues have begun to integrate these tools into their offering so customers can work with their venue of choice and they can set up these rules - what is important to them, what's the criteria by which we want to achieve the best execution possible for our investors. And they kind of programmed them in there, they review that from time to time to optimize them and that's how they integrate it into their workflow. So they really are working closely with their venues to understand what that offering is and then they figure out how can we leverage this into what we're doing on a day-to-day basis to allow us to be as efficient as we possibly can.

    Jamie: [00:15:26] And what about cost? The cost of trading. What's been the dynamic of that over the years?

    Dan: [00:15:31] That's an interesting question. Matt, I know that you've spent a lot of time looking at a lot of this stuff, maybe reflect on some of the things that you've learned.

    Matthew: [00:15:39] Yeah, I think when you look at your increasing the complexity in the environment, I think it's quite interesting. You started off, Jamie, talking about how from an equities perspective, you might find that fixed income is quite a simplistic way. But you look at the complexities of how RFQs evolved. Actually, there's possibly some elements there in terms of equities where you could actually pick out and learn some things. Now fixed income is not straightforward in terms of how you're engaging as a trading protocol. When you have higher complexity that comes with higher costs similar to what we had in equities, when you have fragmentation, you have higher complexity in terms of how the algos operate, different nature of the liquidity forming in the market. That does come with a cost and hopefully a reward as well. But I think we have been seeing an increase in costs for firms in terms of how they're executing and I think, critically, we're at that point in the evolution within the fixed income market to make sure that whatever we're doing is we're driving the right results for the end client. Now, this doesn't necessarily mean that this is an increase in the cost of the spread that's being charged within the product. This is actually just the cost of doing business and the cost of operations. And so fundamentally, I think that's something we always want to make sure that we keep a check on to ensure operational costs, everything like this all comes out in terms of performance. So critically, the better and the sharper we can make that is a good outcome for everyone.

    Jamie: [00:16:53] Emil, if I could turn the conversation over to you for a second, what kind of conversations are you having with clients and what sort of solutions are they looking for?

    Emil: [00:17:01] So what clients are asking for hasn't really changed over the last couple of years. And it speaks a lot to what Dan spoke about in terms of driving efficiency. Clients want fewer clicks. It's becoming difficult to manage tickets that might be of a smaller size that require the same amount of attention that a larger trade might require. So having tools and automation at your side is essential. Also, just looking back to some of my previous experience before joining LSEG, something that was maybe not quite common in credit was to see firm two-way liquidity being made on screen. And now with the rise of these types of protocols and the sophistication of systematic trading, that's become a lot more commonplace and it allows clients to get trades done. And where there might be a misnomer that with the rise in electronic trading, we're seeing US credit IG creeping towards about 50% of that being done electronically, that spreads will start to tighten, as Matthew also pointed to. But there's this balance between servicing clients, getting trades done and drawing up efficient liquidity, as well as being able to capture spread on the other side of the trade, when clients come to us, they're really looking at a lot of solutions that will help drive analytics to help with the decision making that would allow for, making the right dealer selection that's going to allow for ?? as well as other dealers to be looped into that RFQ.

    Emil: [00:18:39] What's interesting is the rise of electronic trading brings new protocols to the industry. And we take a lot of cues from the rates market with RFQ, but spanning out to emerging markets, you're seeing the rise of RFM, request for market, where dealers are then being asked to show both sides of the trade before maybe showing your hand. So there's definitely a mixed bag. And it goes back to this point of as more trading becomes electronic side, it's really actually promoting greater liquidity in the market. So when it comes to the client demands, it really kind of is all underpinned by data and making meaningful analytics. And it was something that we spoke about earlier. A lot of the ingredients are there, but in terms of knowing how to bake that cake, that's where the experts such as, you know, Matthew and Dan come in to help guide clients to that right decision making. And then it also really comes down to accuracy and, to really ruin the analogy, the cake needs to taste good, too. So it comes full circle to that.

    Jamie: [00:19:41] Well, thank you for putting icing on the cake. Matthew, if I could come back to you, something you were saying just when you were introducing yourself is the discussions you're having with regulators. What kind of conversations are you having, as much as you are allowed to say? I imagine there's regulators being highly focused on crypto, what's going on with regional banks? But specifically in credit and in the fixed income world, what kind of conversations are you having?

    Matthew: [00:20:05] I think when you're looking back on their sort of core focuses and you can look at this across Europe, UK, and also in the US, the core focus of the regulators is actually on a very similar parallel track to say that what they want is good, secure, stable and effective financial markets. When you start unpeeling that onion, one of the core focus we've got at is we've just come out of some, you know, we're coming or going through a position where we've had a lot of macro-economic factors coming through, whether it be COVID crisis, coming out of the inflationary pressures that come from that. And critically, one of the key things regulators are focusing on is how do we make sure that we've got effective markets in terms of the formation of liquidity and to make sure liquidity is there in the marketplace. We've had a lot of questions raised by policymakers in terms of what changes do we need to do, do we need to do anything at all. There's been a lot of focus from regulators on the US Treasury market looking at potentially introducing mandatory clearing and various other things as well, and also looking at increasing transparency. Similar sort of questions in Europe and also in the UK where they're sort of looking at how can I increase transparency in the bond market, how can I look to try and promote more liquidity, how can I make it more attractive for investors to invest in the market as well. So it kind of goes back to that they're wanting to make sure they've got effective liquidity there, so it is there to make a market and also investors feel comfortable and safe in making that investment choice.

    Jamie: [00:21:27] And what about a sort of very top down view of over the past ten years, having been through this long period of QE to now moving to a potentially period of QT, what sort of issues does that throw up?

    Matthew: [00:21:37] I think it just comes into when you're looking at it in terms of the liquidity structure, you're going to have different participants in there. So if you're coming from QE, you've got central banks on buying programs and then you've got liquidity tightening. So you've got different participants and there's different ways in terms of how that liquidity can behave. Critically, I’m not going to comment in terms of how the differences are, but actually the key thing for that is, same with Dan and what Emile said, is actually investors wanting to understand how that liquidity functions, how it operates. So there's that demand for data analytics, understanding and making sure that I'm engaging and selecting the right way to actually execute and engage. The way I look at it is sort of understanding the data critically. Data might be sounding really boring, but that is the lifeblood of financial markets. So it's making sure you've got the right data standards there to pick up on that and understand that liquidity and then understanding that microstructure of, okay, this is the way the market is at the moment, this is the way I potentially need to think about executing this particular product.

    Jamie: [00:22:34] Dan, would you agree? Is it all about getting your hands on the right data? And how easy is it to get your hands on the right data to be well informed?

    Dan: [00:22:40] I totally agree with that. I mean, that was another thing that stands out to Matt and I in the survey just how important this is to our buy side customers. They are constantly looking for more information to feed into their investment process. And I think that there's a lot of different things that they're looking at today. One, in the pre trade environment, they're more sophisticated than ever in terms of deciding where they're going to direct that trade and what protocol they're going to use. So they're looking at pre-trade price streams from all of their dealers to determine what dealer may be skewed one way or the other and may be a good counterparty that they match up with on this trade, who's axed on any given trade, who has historical performance that have performed well in this type of trade with me. And all of that feeds into their execution process. Here at Barclays, when we're thinking about how do we enhance our system to provide a good experience to our customers, we're constantly focused on that. If customers are constantly thinking about, I need to have as much pre trade information as I can to optimize who I'm sending these trades to, we want to make sure that we're delivering that to them. So we started publishing axes over third party platforms so they could see that in real time. We are doing things with our pre trade price streams that we think differentiate us as a liquidity provider. We're also trying to support as many protocols that customers are using, so when they are choosing between one style of execution with another, Barclays is there as a counterparty. So we're really trying to understand that what's important to them and deploy resources to deliver solutions for that.

    Dan: [00:24:12] Now, one thing I do want to mention on the back of Emil's comments before, this is not just an RFQ story. A lot of things have begun to evolve. RFQ is definitely the dominant protocol that our customers are using but Emil touched upon a couple of things that were really interesting. RFQ has evolved from being just a one sided. I'm looking to buy this bond in this size to something where there's times where that may not be appropriate. They may want to conceal a little bit what they're trying to do. And they may want to request a market for any given bond. So this is something that's a little less liquid. I'm not going to tell my dealers which direction I'm going that may be right for that liquidity profile of the bond and whoever the executing dealer only finds out, hey, what was the customer buying or selling after that trade is done? And why that's important is because not only does that protect the end investor, but it also protects the dealer who's providing liquidity to some extent because in a traditional RFQ, you ask for a price, you're put in comp with five other dealers, you may win that trade, but four other dealers know that now somebody is long or short that particular bond and RFM conceals that a little bit. They know that bond traded, but they don't know that direction. And that may be a more appropriate protocol for certain types of trades. So there's a lot of different tools in our customer's tool boxes, and Barclays needs to be prepared to support any style of trading that they want to do.

    Jamie: [00:25:32] In my head it's almost like previously you were playing a game of poker, but showing your hand, it's like I'm showing you what I want to do before I make the request. And now you're keeping your cards closer to your chest, which I guess, that is quite a major change.

    Dan: [00:25:44] Yeah, I mean, it's appropriate for certain trades. Other times, look, if you are a large asset manager, there's power in saying, hey, I am looking to do this, we have a relationship, I expect a certain aggressive level on the back of me providing you this information and you should price it accordingly. It goes back to that automation topic that we talked about before. When a trade needs to get done, it is now being determined within the buy side, is this something where a trader's expertise can really add value or is it a small size and a liquid instrument, I'm not going to add much value here, let's just add some automation to that and just get it done so I can focus my attention on something that is much more complicated, a larger size, less liquid. And I have to figure out what is the style of trading that will allow me to achieve my franchise goal for this particular trade. And we're seeing more than ever, clients have options on how to execute that. Barclays does a lot of hard work to try to make sure that we can support it no matter which way of trading they choose.

    Jamie: [00:26:45] Emil, thoughts?

    Emil: [00:26:47 Yeah, to just comment on the tools and places where that liquidity might be shown out. That's something that LSEG has an acute focus on supporting a lot of workflows. One of our flagship solutions is Workspace, which is a data and analytics platform, and its container is built on OpenFin. OpenFin is the technology wrapper that many sell side institutions, most major sell side institutions are using. And where that's important, as Dan alluded to, kind of having efficiency that draws into a client's investment thesis and workflows. So does the technology and having that interoperability that plays from third party platforms to proprietary platforms is really important and to really keep up with a lot of that innovation. What we're doing here at LSEG is leaning into strategic partnerships. Another one that we are quite excited about is Microsoft. And to really start tying a lot of those workflows together, technology is starting to make a lot of that easier. So it starts to play into what tools are available that meet your workflows.

    Jamie: [00:27:55] Dan and Matt would love to reference back to a piece of research that you published last year: Fixed income traders grow savvier with data tech and electronic trading, something you were just referring to me as an equities guy, the savvier fixed income traders are getting, the less opportunity there is. So is it harder for fixed income traders to make money if there's more transparency, the more data there is out there.

    Matthew: [00:28:19] The transparency in data I think is a really interesting one and that's where we are, definitely if you're looking at the equities market versus the fixed income market, we don't have that same level of transparency and information. And it’s a very valid reason why that is, because of the high proportion of the market being driven by risk provision, as we've been discussing all the way through this. So you don't have, in a large majority of cases, that order book and showing the intent of what's happening, because to be honest, you don't have the same amount of interest and you don't have the same frequency of trading. Each product behaves in different ways. There are different natural cycles within those products in terms of how they operate. But I think, we are definitely at a very exciting time for fixed income products in terms of that market evolution, in terms of that data integration and how people can discover opportunities. Because the best thing about transparency is it's not just about a position where I'm giving out way too much transparency and I'm going to get run over in the marketplace because everyone sees my risk.

    Matthew: [00:29:16] Yes, there is an element that we need to be careful, but actually transparency also introduces liquidity into the market, someone might see a trade and they go, Oh, actually I can see that, okay, I quite like to buy that. And so that introduces more liquidity in. So I don't think that's necessarily the right thing. I think we're at that evolution and it's trying to actually get that evolution right and it's being doing gradually over time. So in Europe, UK and the US, we have been gradually increasing more transparency into the marketplace, trying to fine tune it and tinker it. And classic example is the US Treasuries. With the US Treasury doing a quite detailed review on how transparency should operate and the transparency in the Treasury market. And so, there's a gradual element in the evolution to that which I think will bring in more liquidity, new participants, new ways to engage. But the critical thing I think we need to be always checking with ourselves is have we got the right result for the end investor here, are we driving the right outcomes.

    Jamie: [00:30:07] Dan, forgive my ignorance, are there trading solutions for the retail market as well as the institutional market? Is that something that Barclays offers?

    Dan: [00:30:15] Those platforms definitely exist out there. The ones that Matt and I have referenced today are more for the institutional customer base, so that's really where we're focused on.

    Jamie: [00:30:26] I'm just wondering as credit becomes more of a hot asset class or more of an interesting asset class for people to look at what kind of retail solutions are out there and where should people be looking. Or perhaps, Emil, you wanted to jump in.

    Emil: [00:30:39] Yeah. So as Dan mentioned, there's the institutional trading platforms, Tradeweb being one of them, part of the LSEG family. We also have Tradeweb Direct, which is targeted at retail investors. So there are options away from just the big bulge bracket venues to trade on. Tradeweb Direct is a good one. As well as trading bond ETFs, it's another friendly way to step into the fixed income space.

    Jamie: [00:31:07] So guys, just maybe a final question for all of you. It's been a fascinating discussion and thank you so much. Love you to give a kind of, crystal ball kind of answer, like looking at 6 to 12 months. What kind of evolution can we expect in the world of fixed and credit trading? What are the bigger issues that we need to be considering and talking about? I know perhaps you can't comment on some of the more macro pertinent issues of today, like the standoff with the debt ceiling or the regional banking crisis. But to the extent you can talk about possible dislocations in the market and how innovative solutions could help people get into those markets, I'd love to hear your thoughts.

    Dan: [00:31:44] Sure. I'll go first. When I think about the future of fixed income, electronic trading, you know, I reference back to how electronic certain pockets of fixed income already are today, like the rates market. If we look at other parts of fixed income, if we talk about credit, which is, you know, still a ways behind rates, but then we look at something like EM which is just beginning to electronify. I think if we have this conversation a year from now, two years from now, we're going to see new areas begin to become more and more electrified. We've seen a lot of our customer base begin to start trading things like EM interest rate swaps electronically. I think when we think back to how interest rate swaps started trading electronically in the first place, a lot of that was reg driven. That is certainly not the case here. This is an extension of existing workflow in places like rates because of efficiency, transparency, ease of use. And I think this time next year we'll see new markets begin to electrify because of all the benefits that our customers have enjoyed in the more liquid areas.

    Matthew: [00:32:44] Yeah, I think from my perspective, in 6 to 12 months’ time and that's quite a short timeframe, right, in terms of changes to happen in the market and these things evolve. But I think we'll definitely see evolution of more data. We will see an evolution of analytics. Critically, as you know, Jamie, I mean, I will bring up the dreaded three letter acronym of TCA, if we go back to your equities days. How we looking at benchmark, how are we looking at performance? Can we get effective use of this data to look at how performance is happening in the trading and how I'm executing? That that's going to be a key focus. And then one of Dan's previous points and to Emil’s is when you're looking at automation, I think there is from a buy side perspective, there's a core theme coming through in terms of do I really need to be worried about my traders doing lots of small size tickets. Should I be able to put in processes in place to actually make sure I've got some automation to actually enable free up their time to focus on the more difficult trades? Some clients that doesn't necessarily make sense for other clients it definitely does make sense and they're probably they're going down that process and working. So I think that's also going to be another key theme. But, critically, when you're looking at implementing automation, it's about how you are getting there and have you gone through that journey in terms of actually looking out that transactional lifecycle and making sure you've got the right benchmark points, you've got the right process in place before you actually put a system around it.

    Jamie: [00:34:06] Matt, thank you. Emil, final words.

    Emil: [00:34:09] Yeah. And to travel through that life cycle of the trade, it's important to see the automation continue to grow. With our technology solutions, I think in 6 to 12 months’ time we'll see greater efficiency whereas Matthew pointed to traders and any one part of the trade lifecycle will be able to spend more value add time, especially as markets become more turbulent and become more demanding. And we're able to alleviate some of the nuances of clicks that aren't required on the desktop, I think we'll see a tremendous improvement in that space.

    Jamie: [00:34:48] Emil, Daniel, Matthew. I just want to say thank you so much for taking the time to talk about the world of credit and fixed income today. Am I right in saying you're all be at the Fixed Income Leaders’ Summit conference in Nashville, June?

    Dan / Matthew: [00:34:58] Yep. We will.

    Jamie: [00:34:59] Great. The links to your LinkedIn pages will be accessible. I have had a fantastic time on a very personal level, thank you. I feel so much smarter than I did 40 minutes ago. I will have a spring in my step as I bounce around Brooklyn but thank you so much for your time. It's been wonderful hearing your thoughts and yeah, please stay in touch and thank you for everyone listening.

    Jamie: [00:35:26] Thank you very much for listening. And if you like what you heard, please give us a like or a follow wherever you get your podcasts. The information contained in this podcast does not constitute a recommendation from any Refinitiv entity to the listener. The views expressed in the podcast are not necessarily those of Refinitiv and Refinitiv is not providing any investment financial, economic, legal, accounting or tax advice or recommendations in this podcast. Neither Refinitiv nor any of its affiliates makes any representation or warranty as to the accuracy or completeness of the statements or any information contained in this podcast and any and all liability therefore, whether direct or indirect, is expressly disclaimed. For further information, visit the show notes of this podcast or refinitiv.com.

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