SmartBrief: electronic trading and automation in fixed income markets have room to run

Electronic trading and automation have benefited the fixed income markets but still have a great deal of room for growth and improvement, said panelists at the SIFMA Annual Meeting in Washington, D.C.

“I don’t think we’ve scratched the surface on the use of technology within electronic trading,” said Glenn Taitz, global head of fixed income trading at Invesco.

Liquidity, however, is the market’s biggest shortfall, even as electronification has decreased risk and created more operational efficiencies, Taitz said.

Stephen Laipply, managing director and head of US iShares fixed income strategy at BlackRock, said that handling larger trades electronically “has yet to be solved.”

Sonali Das Theisen, managing director and head of fixed income market structure at Bank of America Merrill Lynch, noted that Europe’s market structure historically has been more electronic, currently with a greater focus on automated trade execution than price generation for market making. In the US, price generation is a greater priority, although the two sides “are coming together,” she said.

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