IHS Markit has partnered with Wave Labs, a start-up specialising in fixed income liquidity sourcing, to accelerate price discovery and deliver insights and operating efficiencies to buy-side fixed income managers. The arrangement involves plug-and-play integration of IHS Markit’s thinkFolio multi-asset investment management platform with Wave Lab’s Electronic Liquid Seeking Application (eLiSA).
Sourcing liquidity in fixed income markets continues to present a number of challenges to the buy side, and investment management firms are looking for increasingly innovative solutions to improve price discovery and gain easier access to liquidity.
“ThinkFolio is a leading and highly capable multi asset OMS, but it is not an EMS,” says Brett Schechterman, global head of thinkFolio at IHS Markit. “While eLiSA is primarily a trading technology, it also marries well with our ethos in that it seeks to address portfolio managers’ requirements from a liquidity and price discovery angle. So several synergies come into play with this partnership.”
Wave Labs was founded in late 2018 by industry veteran Miles Kumaresan, formerly head of trading and FinTech at Nordea Asset Management. The company’s eLiSA product aims to empower true holders of fixed income liquidity to transition from an intermediary-driven to a liquidity-driven market structure. Utilising cloud-based APIs to route orders and complete trades, eLiSA eliminates the need for liquidity venue-provided UIs. It also offers a rich set of both pre- and at-trade analytics, as well as multiple order types, automated liquidity seeking and liquidity provisioning features.
A key aspect of eLiSA is that it fits in with trader’s existing high-touch workflows. “In credit trading, you can’t just focus on electronic execution, because voice still has the biggest market share,” says Kumaresan. “There’s a reason why traders trade the way they do, the nature of fixed income is such that you need to have that human interaction to get good quotes and to trade, so you need to support voice, RFQs and so on, because that’s a fundamentally important way to source liquidity.”
The joint solution is targeted mainly towards buy-side credit desks. “The partnership with Wave Labs will allow us to offer enhanced credit trading capabilities to our current global client base,” says Schechterman. “It’s also exciting to be able to go after new business in tandem through the creation of front-office solutions, rather than thinking solely through the lens of our respective products alone. So thinkFolio and Wave Labs will be going in together and talking to both existing clients and potential future clients and their associated credit desks about the value proposition.”