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Treasury Market Eyes Aggregated Streams

USTs take a step in the direction of e-FX with a relationship based order book.


A new trading protocol has taken root in the electronic US Treasuries market, according to a recent poll conducted by industry analysis firm Greenwich Associates.

When asked which electronic trading methodology would be the most successful in three years, the majority of respondents did not select central limit order books (31%) or requests-for-quotes (11%), but chose aggregated streams (51%).

“You could look at it as the best of both worlds between central limit order book and RFQ, because you still get that sort of point-and-click functionality that people like in order-book markets,” said Kevin McPartland, managing director, market structure and technology at Greenwich Associates. “You also can get that bilateral interaction that allows you to maintain those relationships that you have through RFQ markets.

“This is something that we have been promoting for some time,” Nichola Hunter, CEO of LiquidityEdge, told Markets Media. “It’s taken a little while for us to educate and to help participants fully optimize their interaction through a streaming protocol versus the more familiar CLOB & RFQ models. So it was gratifying to see the outcome of the poll because it demonstrates that we and others are having an impact.”

With the rise of non-traditional liquidity providers in the Treasuries market, they can use aggregated bilateral streams to connect with end-customer directly as well as with their banks and buy-side counterparties, noted McPartland.

 

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  • Rob Daly

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