Fixed-Income Trading Platform Automates Complex Portfolio Trading, Leverages ICE Data and Risk Management Tools
The world of bond trading is being swept into the electronic trading world and ICE has offered a new way to automate and make the trading of large portfolios of bonds easier. The ICE Portfolio Auction Platform leverages ICE data and risk management tools and creates an automated process for trading portfolios of bonds.
John Lothian News interviewed Lynn Martin, the president of fixed income and data services at Intercontinental Exchange, over Zoom about the exchange’s new Portfolio Auction Platform and how it works.
Martin talks about how trading a bond portfolio worked in the past and the issues this new platform is trying to solve. She said the platform has seen trades with more than 1,500 line items of bonds.
As the supply of global debt has expanded, fixed-income portfolios have become more difficult and complex to manage, she said.
To improve efficiency, firms have moved to portfolio trading to transact the exchange of their bonds. The ICE Portfolio Auction Platform helps firms seamlessly trade a portfolio of securities and get the exposure level and the specific bonds they want.
The platform’s all-or-none functionality makes sure you are getting what you want, she said. However, some asset managers are pressing the exchange to provide most-or-none functionality as well.
Trades can be made with real-time prices or end-of-day prices, which allows portfolio managers to mark their portfolios without slippage.
Investment grade and emerging market corporate bonds are the ones most often traded on the platform, though some high-yield trades were recently transacted, she said.
Trades have occurred as small as a few million dollars worth of bonds to as much as three-quarters of a billion dollars so far, Martin said.
It is buy-side market participants who are initiating the trades, with sell-side and market-makers also on the platform, she said.
One of the biggest advantages of the platform is that there is no limit on the number of line items in a portfolio that can be traded, something Martin said can be an issue at their competitors.
Updated technology, the ability to leverage ICE data, analytics and risk-management offerings, and automated workflow processes create value for customers who use the platform, she said.
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