MiFID II continues to drive buy-side clients towards FI EMS selection as the need to identify and record liquidity becomes mandatory.
Almost two-thirds of European fixed income desks are considering partnerships with at least three new platforms in the coming year, according to new research.
The study from WBR found that heads of desks stated the need for new technologies in order “to meet best execution requirements and maintain a competitive edge”.
When asked what new number of platforms and alternative technology solutions they were considering in the next 12 months, almost two-thirds said three or more, with 36% saying they would look at one or two.
The results showed that 10% said they would even consider over six new technology solutions.
According to WBR, the aim of the research was to show how MiFID II has had an impact on trading practices and the emerging technology requirements of European buy-side desks.
“Buy-side desks are having to become more pro-active in their search for technology partners,” said Carl James, global head of fixed income trading, Pictet Asset Management, in the report. “At one level this is about an arms race for liquidity and survival.”
When evaluating new platforms, the heads of fixed income surveyed ranked its ability to integrate with a desk’s existing technology as the most important factor, closely followed by the credibility of the provider behind the platform.
Post-MiFID II, 30% responded that click-to-trade protocols present the most promising opportunities for the buy-side, as more participants move beyond the established request for quote (RFQ) system. This was closely followed by 27% viewing streaming executable prices as the most promising trading protocol.
“While most bond trades currently occur on RFQ, survey respondents expressed a clear preference for trading on firm prices,” said Ian Shea, head of European fixed income trading at Jane Street.