With the proliferation of new venues for Fixed Income trading there is an interesting, as yet unresolved question...
Historically (by which I mean, pre-Lehman Brothers) a European buy-side could happily run with an OMS with staging integrations to:
- Tradeweb for Govies
- MarketAxess for corporates
- Bloomberg TSOX as back-up
Maybe throw in Bondvision for a more continental flavour - of course especially popular within the Italian market.
Now, each of these venues would expect a buy-side to take up a chunk of their desktop real-estate to get their GUI installed, install certificates, get whitelisted IP address ranges, get a new username and password and so on...
When a firm was running a handful of these applications it was a reasonable model - the typical trader I have worked with has had between three and sixteen screens so there has been plenty of space. At last count there are around 90 venues out there, and many of these new venues are creating lovely new applications for users - some are going the Java or C# fat client route and others are using AJAX and streaming data via the internet and/or over leased lines/IP extranets.
Part of the business model for the buy-side OMS vendors out there was to charge the older Fixed Income venues an access fee to get the code written by the vendor to allow the buy-side to stage "orders" to the venue user interface and from there create RFQ/RFS with brokers to interact with the market. A key part of the perceived value proposition was that the order flow had to pass through the user interface.
If you only had to learn three or four new user interfaces then this could work, a bit clunky but I've certainly done this sort of FIX based staging integration several times.
What now though - is the typical buy-side going to have 90 new user interfaces on their desktop? Will the buy-side OMS vendors have the capacity to build, test and maintain a whole bunch of new FIX connections to venues that are not mature and so will be changing on a regular basis?
Well, I doubt that. But an interesting change may come about if/when regulators insist that people who operate things that look like markets have to stop bundling up applications alongside the market.
Look at the equities world - take Fidessa as an example. A quick search on a popular search engine shows that Fidessa claims to have connections to 160+ exchanges. The Fidessa application model is that the core system connects via a modular design to whichever markets are required but the user really only has to learn the way that the Fidessa user interface works, rather than 160 exchange user interfaces.
Will unbundling for Fixed Income occur in such a way that the ISV market can offer multi-market access for the buy-side to engage with whichever new Fixed Income venues they choose or will the tightly coupled user interface and trading platform model persist?