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Innovation in Focus: The Analytics Powering Fixed Income Matching

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19 November 2013

Abstract

Institutional capital markets players in fixed income have historically relied on qualitative decisions by salespersons as well as brute force tactics to match trades. However, with balance sheets disappearing, both the dealers and the buy side are leveraging analytics for their fixed income matching purposes.

In Innovation in Focus: The Analytics Powering Fixed Income Matching, Celent examines the increasing use of analytics surrounding the fixed income matching and execution process. The report also highlights emerging technology empowering dealers, multidealer platforms, and the buy side in the fixed income markets. Celent believes the data analytics evolution is targeting fixed income products which have liquidity constraints or are otherwise presented with matching difficulties.

Ultimately, analytics in fixed income will be built primarily on data that already exists or new data that can be easily accessed. Much of it is underleveraged. The usefulness of these data sets will be evidenced by increasing the opportunities for matching and improving liquidity in the markets.

“The use of analytics for fixed income matching, by leveraging new and existing data sets, provides a greater likelihood of a match and therefore an execution,” says Joséphine De Chazournes, Senior Analyst with Celent’s Securities & Investments Group and coauthor of the report.

“Data analytics are being supported by innovative technology that comes in a variety of flavors and functions,” adds David Easthope, Research Director with Celent’s Securities & Investments Group and coauthor of the report.