Electronic trading for corporate bonds – enhancing efficiency and addressing brokerage costs

By Frank Cerveny, Global Head of Relationship Management, MTS Markets

Electronic trading has been on the rise, driven in large part by automation, greater transparency and more options for connectivity. It goes without saying that the more processes can be automated, the greater the efficiency gains that can be achieved. At MTS, we provide several electronic protocols for corporate bond traders to improve the efficacy of their workflow. 

MTS is listening to the concerns of sell-side and buy-side clients about brokerage costs and we have built a fee structure that is as transparent and as competitive as possible. For example, in Europe, there is no marginal fee for credit on the buy-side, and we offer either low or additional no-cost options for the sell-side clients who are already active in government bonds, covered bonds and SSAs.

Electronic trading at MTS

Apart from considerations of cost, it is important that the solution delivers on service. That is why, MTS has continued to invest in its technology, enhancing its platforms, developing its data capabilities and adding expert resources. Listening carefully to the needs of traders, MTS has developed a range of features to meet an ever-evolving market and respond to the demands of corporate bond traders.

MTS has continued to develop platforms that offer advanced functionality, connectivity with a diverse range of global counterparties and ease of deployment as reflected in the BondsPro and BondVision offerings.

What is BondsPro?

BondsPro is an electronic trading platform that offers access to liquidity and real-time execution on its riskless principle order book. It supports USD and a wide range of non-USD denominated corporate bonds and emerging market debt.

Through BondsPro, MTS provides unique pre-trade transparency and liquidity for US fixed income market participants. Traders can view real executable prices directly from the platform before committing to a trade. BondsPro provides actual, not indicative, prices available, giving traders a more meaningful and accurate insight into the behaviour of the credit market.

The fragmented liquidity landscape can often cause huge concerns for traders – especially when it comes to costs. It’s not uncommon for traders to split their liquidity across several venues, resulting in a duplication of fees and a lack of consolidation. BondsPro’s all-to-all nature ensures that traders have broader access to a diverse pool of counterparties through a single interface, and without a huge price tag.

This goes beyond cost. BondsPro allows traders to see prices across trades from both dealers and clients, providing a much fuller picture of how different credit market participants are behaving. With more than 100,000 real-time prices at a time from over 500 market participants, the platform allows clients to accurately identify trading opportunities, determine pre-trade liquidity, and perform valuation analysis using actual executable market prices without relying on indicative quotes or derived values.

The platform also offers several tools to enable more efficient processing of low touch trades, including direct integration with Bloomberg TSOX and BondsPro’s List Trading, which allows for the execution and management of multiple trades simultaneously. The ease of deployment due to new technology enhancements, such as tiering, allows for further efficiency gains.

The challenge of finding liquidity during times of crisis has only reinforced the benefits of our model. BondsPro has continued to grow its user base and its volume – with 17 new accounts joining in the first half of 2020 and trading volumes up 20% in the second quarter over last year, including a 50% increase in June. If traders are looking for a cost-effective solution that still delivers on service, BondsPro is a very attractive option.

What is BondVision?

MTS BondVision is an appealing option for investors looking to leverage RFQ, click-to-trade, list trading and Auto Execution protocols. As a multi-dealer-to-client trading platform for government bonds and credit, BondVision has a dealer network with 27 of the biggest names in the corporate and government bond markets across geographical regions, providing a rich source of liquidity for its 240+ buy-side participants. MTS connects users to the heart of the market’s liquidity and facilitates trading in a wide range of instruments including corporate bonds, covered bonds and SSAs.

However, electronic access isn’t everything. Buyside traders need to be able to fully embrace the benefits this platform can provide. With BondVision, traders can now access the powerful MTS Auto Execution rules engine, allowing for the fully automated trading of spread products as well as government bonds.

The automation that Auto Execution provides is enhanced by offering highly detailed customisation of over 20 parameters for maximum control, without any disruption to the order staging process, direct from the Client’s OMS. In a changing market with traders growing understandably cautious about how to pass on trading costs, our work with BondVision ensures simplified workflow with access to the latest functionality for a wide range of government bonds and credit products; all at a competitive cost.

The benefits of automation without the price tag

Electronic trading for corporate bonds is hugely advantageous for traders, but it is natural to be worried about the investment required to use these platforms. With many providers continuing to raise prices, it may seem that electronic trading is not cost effective for everyone.

However, at MTS, we’re dedicated to remaining transparent and reasonable with our fee schedule, allowing traders to access liquidity easily and without concern. Whether it’s through BondVision or BondsPro, we remain committed to providing a consistent and transparent approach to our pricing while solving your trading needs.

Securities Offered Through MTS Markets International, Inc.Member: FINRA, SIPC

This article originally featured in The DESK