MiFID II and its impact on fixed income markets

As FlexTrade continues to ensure you are ready for MiFID II compliance, we explore its specific impact on fixed income markets in our latest whitepaper entitled: MiFID II & Fixed Income; Big Changes on the Horizon. Here you can read an excerpt where FlexTrade’s Fixed Income Product Owner, Matthew York, lends his perspective on pre-trade analysis.

“Banks will also be providing the equivalent of Level 2 data, similar to the single-dealer provided liquidity in FX markets. It will be up to EMS providers to aggregate this data and create a quasi-order book,” said York.

Buy-side firms will need to automate the process as much as possible. “Tools for pre-trade analysis of fixed income will play a critical role,” said York. Since there is a lot of time spent around deciding how and where to trade a bond, he said an EMS can snap the arrival price and capture any of the events surrounding the period of non-activity so that traders can begin to do some meaningful fixed income TCA. With a less liquid bond, there could be a period of half an hour, one hour, two or three hours of inactivity, where the trader is assessing liquidity and venues.

“The idea is to lock in any events around that period of inactivity and show that a buy-side trader has been following his or her stated investment process,” said York.

To download this whitepaper or any others from our series, click here.