About a-team Marketing Services
The knowledge platform for the financial technology industry
The knowledge platform for the financial technology industry

A-Team Insight Blogs

Overbond Partners with MTS and Releases New AI-Driven Margin Optimisation Model

Subscribe to our newsletter

Overbond, the API-based credit trading automation and execution service, has entered into a data sharing and redistribution agreement with MTS BondsPro, the all-to-all fixed income trading platform. By partnering with MTS BondsPro, Overbond will enhance its AI-generated fixed income data feeds and automated trading solutions by integrating an additional 10 million price updates daily, across 25,000 investment grade, high yield and emerging market bonds. In turn, MTS BondsPro clients will gain access to Overbond’s fixed income liquidity confidence scores and best executable pricing.

Earlier in the summer Overbond secured additional funding from Fitch Ventures, stating that the company planned to integrate new data sources to expand the coverage of its AI models, and provide clients with enhanced AI trade automation solutions.

“To date, we’ve been able to aggregate data from real-time streaming pre-trade composites, but although those data feeds have quotes and ticks, size typically doesn’t get disclosed,” says Vuk Magdelinic, CEO of Overbond. “We’ve worked really hard over the last couple of years to also include post trade data, by aggregating Euroclear and Clearstream settlement data, as well as data from APAs. By adding data from all-to-all venues like MTS BondsPro, which provides firm quotations including size, and is an uncorrelated data set to an RFQ mini auction, or to settlement post trade data, we improve the precision and coverage of our outputs.”

The company has also this week released a new an AI-powered margin optimisation function into its existing automated trading system. By training the automated system to optimise their hit ratio according to their desired parameters, sell-side traders can increase the number of trade inquiries that they can respond to without manual intervention, thereby avoiding workflow bottlenecks.

The Overbond margin optimisation model incorporates variables that give insight into security, issuer and macro-level market risk and ensure that the automated margin is sensitive to intra-day risk movements. This data is collected from data vendors such as TRACE and includes bond-specific data such as coupon and amount outstanding, issuer-specific data such as quote counts and the volatility of the mid-price for the issuer, and sector-specific data such as the volatility of the bid-ask spread.

“This new model is geared for the category of RFQs that are eligible for auto-response, where you really don’t want to introduce a trader to manually margin the price,” says Magdelinic. “You want to auto margin based on a combination of the market parameters and your internal firm or desk-specific parameters. And you want to be able to optimise that by looking at things like the execution record over the last two years for similar bonds, from a similar client, on a similar venue, in a similar size, with a similar risk situation, and so on. So we’ve engineered a model that is end-to-end, zero touch, automated margining, where you can include a desired hit ratio within your auto response, which is key for maximising P&L.”

He adds: “Because this is an AI self-learning model, it trains itself on your historical executions from the last two years. Then you can control it further by adjusting thresholds and parameters.”

Subscribe to our newsletter

Related content


Recorded Webinar: The challenges and potential of data marketplaces

Data is the lifeblood of capital markets. It is also a valuable commodity providing financial institutions with additional insight when gathered in an internal data marketplace, or packaged and sold externally to other institutions. While the theory is sound, the practice of setting up a data marketplace can be challenging. Internally, vast amounts of data...


Broadway Technology Partners with MarketAxess to Build US Treasury RFQ Workflow

Front office solutions vendor and fixed income specialists Broadway Technology has partnered with MarketAxess, the fixed income electronic trading platform operator and post-trade service provider, to build and support a Request for Quote (RFQ) workflow feature for the MarketAxess US Treasuries marketplace. Broadway’s fixed income business was spun off by ION in January 2021 and...


RegTech Summit London

Now in its 6th year, the RegTech Summit in London will bring together the RegTech ecosystem to explore how the European capital markets financial industry can leverage technology to drive innovation, cut costs and support regulatory change.


Trading Regulations Handbook 2022

Welcome to the third edition of A-Team Group’s Trading Regulations Handbook, a publication designed to help you gain a full understanding of regulations that have an impact on your trading operations, data and technology. The handbook provides details of each regulation and its requirements, as well as ‘at-a-glance’ summaries, regulatory timelines and compliance deadlines, and...