Electronification of European Fixed-Income Markets: How Participants Need to Up Their Tech Game

Structural change in Europe’s government bond and credit markets is now gaining momentum, as new entrants, with an emphasis on high-performance technology, are raising the bar in terms of technology and trading practices.

The arrival of non-financial liquidity providers (NLPs) to the European arena represents the next phase in the electronification of European fixed-income markets, bringing with them digitalisation and automation of the trading work flow. This is forcing established dealers to leverage new, more sophisticated e-trading tools in order to remain competitive, while opening up new opportunities to streamline operations, get greater insight from their internal data and improved client outcomes through more accurate pricing.

This white paper explores how the influence of NLPs is introducing high-frequency trading (HFT) technologies and values from US equity, FX and Fixed Income markets, as well as altering the liquidity landscape across the spectrum of bond and credit markets. It discusses lessons learned from the US, which suggest that European firms need to embrace technological solutions to navigate a marketplace that increasingly resembles electrified asset classes such as equities and FX. And it offers guidance for firms seeking efficient ways to source liquidity and manage the resulting data deluge.