Fixed income platform market reaches saturation

With countless fixed income initiatives and platforms readily available and growing, industry experts agree new platforms will not be able to compete.

The growth in fixed income platforms will grind to a halt leaving behind only a few in the market, according to industry experts.

As the market is now over-crowded with fixed income initiatives and platforms, industry experts believe any new entrants are unlikely to succeed and many existing platforms will disappear in the coming years.

Stu Taylor, chief executive at Algomi, the fixed income information network provider, highlighted that any new platforms will now face stiff competition.

He said: “Clearly, there is a saturation in the electronic market, but new players will have to compete with firms like Liquidnet, a very well-funded platform, which has the time to further develop.”

Carl James, global head of fixed income at Pictet Asset Management spoke to The Trade at the FIX Trading EMEA conference in London in March, about the issues surrounding fixed income platforms.

James, who is also co-chair of the EMEA investment management subcommittee at FIX Trading Community, explained some of the reasons why some platforms may not survive.

He said: “There approximately 98 fixed income platforms or initiatives in the market with a wide variety of concepts and protocols, such as dark pools, time-based auction processes, synthetic central limit order book, all of which cater for a variety of fixed income instruments.

“It is clear to me that the current 98 will eventually become a much smaller number. This could be for a variety of reasons; the concept did not catch on; not enough customers; poor marketing; running out of money.”

The fixed income market is undergoing dramatic changes as investors are looking to apply a new approach when attempting to enhance returns.

The Trade asked Russell Dinnage, senior consultant at GreySpark Partners, about the forces behind the shift in the fixed income market.

He said: “There are two fundamental forces challenging the structure of trading in the fixed income market for buy-side firms, sell-side banks and non-bank liquidity providers in 2016: the depth of liquidity for government bonds, corporate credit and single-name CDS and the ability to form transparent prices for block-size corporate bonds trades and for block-size trades in off-the-run, non-US or Euro-area government bonds and single-name CDS.”

Regulatory forces

Regulation has also played a part, as Dinnage continued: “Basel III capital constraints are forcing the structure of the fixed income market across all types of instruments to move away from a centralised model focused on the ability of banks to warehouse risk on their balance sheets, and thus provide depth of liquidity and readily-available reference pricing both on an OTC basis and within dealer-to-client voice and electronic execution trading venues, toward a decentralised structure.”

Additional post-financial crisis regulations like the US Dodd-Frank Act and Mifid II in the EU are encouraging an electronification of the fixed income market.

Dinnage explained the ramifications on trading platforms following this electronification: “…the structure of the market will shift toward a more decentralised model in which large buy-side firms can become bonds and swaps liquidity providers in their own right.

“However, in order for this shift to occur, it is also important for large buy-side firms to increase the sophistication of their fixed income liquidity aggregation tools.”

Mark Watters, director at AxeTrading, a fixed income solutions provider, drew similarities from the equities market when he discussed the changes. The equities market also experienced a saturation of platforms post-Mifid I.

Watters said: “In some ways it’s a little bit like the early days of the car industry, as everybody is trying to get ahead of each other. The same thing happened in the equities market – the platform market became saturated – but eventually it condensed.

“The multiplication of electronic trading venues and protocols within the fixed income platform market will continue for some time.”

Dinnage at GreySpark echoed this view, explaining decentralisation of the fixed income market would ultimately lead to more platforms coming on to the market.

He said: “Decentralisation means electronic platforms will have to be present, and thus there will be a continuation of platform saturation further down the line. If the market succeeds in decentralising, then there will eventually be a fight for market share. The fixed income market as a whole — across every region globally — is really only at the beginning of this process.”

Algomi’s CEO, Stu Taylor told The Trade that banks’ withdrawal from the fixed income space has had a big impact on the market.

He said: “The applicability of electronic trading in fixed income is limited to the most liquid parts of the market, and that’s where they have seen success. There is a ultimately a structural issue, with the nature of regulatory charges meaning banks are penalised for holding risky assets.”

He continued: “This is effectively a daily charge and can destroy trade economics if a bond may have to be held for 3-6 months, because it only trades a few times a year. Banks have now largely stopped holding inventory in these less liquid instruments and instead focusing risk and balance sheet in only the most liquid bonds.”

Co-founder at AxeTrading, Dinos Daborn, explained that despite the growth in electronic trading, he expects the more established platforms to survive the market.

Daborn said: “The market is predominantly in the hands of the incumbents, but there are other platforms gaining traction.

“We are platform and market data agnostic and will integrate to all venues, as per our client needs, so that they can access everything via the AxeTrader front end. Ultimately, the more platforms the more fragmented the market becomes – that’s where we can help.”

Deciding which fixed income platform to use can be difficult, but industry participants unanimously agree that there is no single fixed income platform out there to suit all firms.

Pictet’s Carl James said: “Some of the platforms are exclusively buy-side, or all to all. So whether you are buy or sell-side, you have to decide which platform(s) suit your trading style and strategy and fixed income instrument.“

Success story

MarketAxess’ electronic fixed income trading platform is one of the market’s success stories. Its platform is considered a market leader by many, and enables fixed income traders to source competitive and executable bids from over 1,000 global institutional investors and broker-dealers.

The Trade asked Gareth Coltman, head of European product management at MarketAxess, what he thought separates MarketAxess from other fixed income platform providers in the market.

He said “Technological innovation is at the core of our business and we are providing new ways for firms to access the market through data….

“Trax, a subsidiary of MarketAxess, is a leading provider of capital market data, trade matching and regulatory reporting services and estimates that it processes approximately 65% of all fixed income transactions in Europe as part of its post-trade service offering.”

Coltman added: “This level of insight into the European fixed income markets has ultimately helped improve the trading experience on the MarketAxess platform and has allowed firms to engage with the market in new ways.”

When looking at other players in the market, Watters at AxeTrading suggested those platforms with the least administration requirements may trump the market.

He said: “There is no perfect fixed income platform out there, but those with a central counterparty and less administration for onboarding appear to be winning market share.

“Those going towards a central counterparty model are beginning to evolve and are the showing the way forward.”

Bondcube, an electronic trading start up which launched in 2012, is an example of a less successful venture in to the fixed income platform market. The firm filed for liquidation in Summer 2015.

Despite being backed by Deutsche Boerse, Europe’s largest exchanges operator, shareholders decided not to provide further funding to Bondcube when “sufficient business prospects failed to materialise.”

Bondcube suffered a ‘liquidity drought’ and lack of trading activity which ultimately halted its growth. At the time, market observers forecast Bondcube was one of the first of many fixed income platforms set to fail.

GreySpark’s Russell Dinnage highlighted the difficulties facing new fixed income platforms: “There is a high barrier to entry for any new exchange platform operator in any asset class, but especially in fixed income where – up until the last 5-10 years – the concept of partial or fully electronic execution was not standard across the marketplace.”

Algomi’s Taylor echoed Dinnage’s thoughts and added: “It’s tough because fundamentally when a new player enters the market, everybody wants to know what is new and what their edge is.”

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Meet the Fintech 40: The people powering financial innovation

This is FN’s third Fintech 40, a list of the most influential people in the European financial technology sector.


This is FN’s third Fintech 40, a list of the most influential people in the European financial technology sector.

When our first Fintech 40 list was published in 2014, the sector was considered a bit offbeat. That is certainly not the case now, with even the stuffiest bank or fund manager buying beanbags and table football to try to make their offices as cool as Google’s.

The latest list certainly reflects how far fintech has come over the past few years – but also indicates that it has much further to go – notes FN editor Gren Manuel in a comment.

Financial News’s Fintech 40 are listed alphabetically below. FN subscribers: Click here for profiles and photos of those who made this year’s list . All profiles by Anna Irrera.

Ismail Ahmed / @WorldRemit
Founder and chief executive, WorldRemit, London

Alex Batlin / @AlexBatlin
Head of UBS FinTech Innovation Lab and senior innovation manager, UBS, London

Mark Beeston / @MB_IFM
Founder and managing partner, Illuminate Financial Management, London

Mariano Belinky / @belimad
Managing director, Santander InnoVentures, London

David Birch
Director of innovation, Consult Hyperion London @dgwbirch

Eileen Burbidge / @eileentso
Partner, Passion Capital and FinTech Envoy, HM Treasury, London

Richard Gendal Brown / @gendal
Chief Technology Officer, R3 CEV

Claire Calmejane / @ccalmeja
Director of innovation, Lloyds Banking Group, London

Simon Champ
Chief executive officer, Eaglewood Europe, London

Christophe Chazot
Group head of innovation, HSBC, London

Samir Desai / @samirdesai01
Co-founder and chief executive, Funding Circle, London

Christian Faes / @ChristianFaes
Chief executive and co-founder, LendInvest, London

Roberto Ferrari / @ferrarirobtweet
General manager, CheBanca!, Milan

Steve Gibson / @steve_gibson_
Chief executive, Euclid Opportunities, London

Alexander Graubner-Müller / @Kreditech
Co-founder and chief executive, Kreditech, Hamburg

Manu Gupta / @mgupta1013
General partner, Lakestar, Zurich

Jan Hammer / @janatindex
Partner, Index Ventures, London

Taavet Hinrikus / @taavet
Chief executive and co-founder, TransferWise, London

Ricky Knox / @rickykno
Founder, Tandem Bank, London

Mike Laven / @currency_cloud
Chief executive, Currencycloud, London

Nektarios Liolios / @nekliolios
Co-founder and chief executive of Startupbootcamp FinTech, London

Céline Lazorthes / @CelineLz
Chief executive and founder, Leetchi Group, Paris

Rob Moffat / @robmoff
Partner, Balderton Capital, London

Mark Mullen / @atom_markm
Chief executive and co-founder, Atom Bank, Durham

Harry Nelis / @hnelis
Partner, Accel Partners, London

Sean Park / @parkparadigm
Co-founder and chairman at Anthemis Group, Geneva

JP Rangaswami / @jobsworth
Chief data officer, head of strategy and innovation within the COO office, Deutsche Bank

Matteo Rizzi / @matteorizzi
Adviser, Omidyar Network and co-founder FinTech Stage, Brussels

François Robinet / @AXAVentures
Chairman, AXA Strategic Ventures, Paris

Philippe Ruault
Chief innovation and digital officer, BNP Paribas Securities Services, Paris

Sebastian Siemiatkowski / @klarnasebastian
Co-founder and chief executive, Klarna, Stockholm

Chris Skinner / @Chris_Skinner
Chairman, Financial Services Club; founder and chief executive Banking on Blockchain Fund

Valentin Stalf / @valentinstalf
Chief executive and co-founder, NUMBER26, Berlin

Stu Taylor / @Algomi_Ltd
Chief executive and co-founder, Algomi, London

Stefan Tirtey / @toetoe
Managing director, CommerzVentures, Munich and Frankfurt

Fabian Vandenreydt / @FVandenreydt
Global head of securities markets, Innotribe & The Swift Institute, Swift, La Hulpe, Belgium

Pieter van der Does / @Adyen
Chief executive and co-founder, Adyen, Amsterdam

Gonçalo de Vasconcelos / @GoncaloTV
Chief executive and co-founder, Syndicate Room, Cambridge

Nigel Verdon / @nigelverdon
Partner, Digital Change Partners, London

Anna Wallace / @wallace_a_j
Head of Innovation Unit, Financial Conduct Authority, London


The Fintech 40 aims to recognise individuals who are making a significant contribution to the development of Europe’s fast-growing fintech ecosystem. Over the past three months, FN’s team of journalists canvassed the market for opinion and drew up a longlist of more than 115 people. Nominees could impact the retail financial industry as well as FN’s core coverage areas of asset management, investment banking, trading and private equity. All had to be based in Europe, the Middle East or Africa. The individuals were then assessed on their technological innovation and achievements to date; their potential to shape and influence their sector; the assets or resources at their disposal; and their broader contribution to making finance more efficient.



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Euronext and Algomi to Launch New Trading Facility

Euronext today announced a 10 year partnership with leading Fixed Income technology provider Algomi to create a long-term joint-venture. This JV, capitalised by Euronext for US$ 2.3 million, will deploy Algomi’s award winning technology to a new MTF owned and operated by Euronext.


Dealers will be able to access the trading interface either directly through their existing Algomi technology or through their stand-alone systems. The platform will use algorithmic smart matching processes to create an auction between dealers to improve liquidity and search for best execution.

Strategic Rationale

Local and global bond markets comprise c.US$87 trillion in market value. The majority of trades, by value, are still completed on the phone which results in an opaque and fragmented market based on imperfect information.


There is limited data on buyers and sellers which results in low liquidity. Investors in these markets continue to struggle to find the right trading counter-party at the right time. This unique solution will link Euronext, the banks and investors in a collaborative network which creates a centralised market place. It will turn disparate data into relevant and structured information and increase trade opportunities in the pan-European corporate bond market.

This solution completes Algomi’s Honeycomb bond network, that already connects asset managers and their dealers, by bringing the dealers together for the first time with the strength of the regulated federal model of Euronext.

Paul Humphrey, Head of Fixed-income, Rates & FX at Euronext, commented: “Banks are under increasing pressure to de-risk balance sheet and hold less bond inventory. This platform will create huge network effects that will assist multi-located global sales and trading teams to identify the most profitable trades from the “market noise”.

Mark Ledwards, Head of Exchange & Data Solutions, Algomi: “Existing data from our Honeycomb network suggests that over 40% of less liquid indications of interest could benefit from being matched on the Euronext platform.”

Stu Taylor, Co-Founder and CEO Algomi: “We are delighted to be working with such a significant market player as Euronext, who have already proven themselves to be highly nimble and forward thinking in this field. The long term relationship is evidence of the commitment by both sides to improving the European corporate bond market.”

Stéphane Boujnah, CEO of Euronext: “The creation of this platform will ultimately diversify Euronext’s offering, with further key synergies in technology and market data to be explored jointly with Algomi. This initiative, alongside our broader ambitions in FICC, fits with Euronext’s “Agility for Growth” strategy of capturing innovative opportunities arising from the market environment, accelerating growth through strategic partnerships, enhancing agility and strengthening its core offering to finance the real economy.”


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Britain’s Fintech Stars Make The Big League

Which British fintech companies are making a splash on the global stage? Courtesy of the new Forbes Fintech 50 list, we can provide an answer to that – or at least a partial one.

Forbes reporters spoke to hundreds of startups, CEOs, business founders and industry experts in order to establish which fintech businesses are really getting people excited. To make the list, a business had to have operations in the US – which clearly rules out quite a number of British fintechs – and most were American businesses. However, three London-based companies have made a sufficient impact on the other side of the Atlantic to make the list.

The three British fintech stars, Forbes’ exercise reveals, are:


The company’s honeycomb bond-trading information system helps buyers see which banks hold inventory of bonds they want to buy—information that, surprisingly, isn’t now readily available.



This company, increasingly well-known in the UK, chops the high fees that individuals and small businesses pay for international money transfers by (invisibly to customers) matching buyers and sellers of each currency.


A phone app for money transfers to developing world companies, WorldRemit typically charges 2% to 3% on a $200 transfer, compared with the 8% charge typically levied by existing providers in this market

An honourable mention should also go to Adyen, a business that has invented a payment platform to bypass rickety old infrastructure to power global e-commerce across six continents for companies such as Facebook, Uber, Airbnb, Alipay and Spotify. The only other non US company on the list, Adyen hails from Amsterdam.

However, outside of the US, it’s the UK’s fintech sector alone that makes any sort of impression on the Forbes list, reflecting the continuing dominance of the London startup scene in particular in Europe’s fintech sector.

By some estimates, the UK’s fintech sector is now worth £20bn a year to the country’s economy, with around 135,000 people employed in the sector. Innovate Finance, one of the trade bodies that serves the sector, is hoping that it will attract $8bn worth of venture and corporate capital a year by 2020.

That will depend on more big success stories emerging. TransferWise, one of the three Forbes choices, is already acknowledged as a precious “unicorn” company – a fast-growing business worth more than £1bn. In Funding Circle, the UK has another one.

With backing from Government and the regulatory authorities – which have done their best to facilitate innovation – as well as leading banks, including Barclays, Lloyds and HSBC, and other investors, there is every reason to be hopeful more unicorns will spring from the crowd.


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Algomi links up to FIX amid onboarding tool launch

Algomi’s Synchronicity platform to be rolled out as a SaaS, as Honeycomb users are set to link with FIX for pre-trade data.

Algomi’s Honeycomb users will now have access to open source FIX connectivity, as the fixed income initiative rolls out a sell-side onboarding tool.
Fintech Investment ReviewsHoneycomb will become part of the FIX common standard, ensuring confidential pre-trade data exchange between client and dealer is protected, Algomi said.

Banks will also distribute axes, price and data via FIX to buy-side customers who will view the information in the context of their portfolios, facilitated by Algomi.

Co-founder and chief technology officer, Usman Khan, said customers will “now be able to have true bi-directional FIX connectivity in a secure and confidential way that goes beyond the simple point-to-point connection provided by FIX alone.”

The link up with FIX comes as Algomi confirms the launch of a tool aimed at reducing technology onboarding challenges.

Synchronicity – Algomi’s ‘sell-side engine’ – will be rolled out as software as a service (SaaS), allowing banks to adopt the new technology within four weeks without limiting any existing internal technology infrastructure.

Launched in 2012, Synchronicity is described as a platform which matches sell-side data with traders in real-time, ensuring “all relevant information is presented for each execution opportunity.”

CTO Khan added that Algomi’s development of Synchronicity as a SaaS has “compelling operational and financial benefits,” which can also help the banking sector with regulatory requirements.


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