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The importance of automation, with ION Markets

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In June, ION Markets was named as the Best Trading Solution for Fixed Income by the TradingTech Insight (TTI) Awards in the USA. ION is the largest global provider of trading, analytics, treasury, and risk management solutions for capital markets, commodities, and treasury management. This award for ION’s fixed income team is their second such win of the year: in February they were also named the Best Trading Solution for Fixed Income by the TTI Awards Europe. To discuss these awards, to find out what distinguishes ION in this space, and to learn more about the importance of automation according to ION, we spoke to Edoardo Pacenti. Edoardo is the Head of Trading Tools for Fixed Income at ION Markets.

Outlining what ION does, and what their product offers, Edoardo explained:

“Just to give a bit of background in fixed income, this mission is to automate mission critical processes, controlling workflow that can affect the entire deal. So, we offer a comprehensive solution that covers multiple asset classes. We are mainly focused on credit, rates, and swaps, but we have all different types of customers. This is possible because we offer overall connectivity to any market through a single screen. And the solution is readable and it’s modular, according to what the customers need. They can then choose the services they want to be included in the overall blueprints. If they want connectivity to a specific market, then we can then build the solution that they need, and with the services that they want and expand the platform. It’s quite flexible, and can even manage one screen with many different types of services. You can connect with as many markets as you want.”

This flexibility, Edoardo suggested, was particularly important during all the turbulence of the Covid-19 pandemic. Market conditions were, of course, incredibly challenging: not only because of unparalleled volatility but because entire work processes were complicated by the shift from office to home working. The TTI Award, Edoardo believes, is a recognition of the product’s resilience and the added value it took on during tumultuous times:

“We’re very pleased with the award, it’s a recognition of the investment in our product and the focus we have on the customers. Especially now during the pandemic, the fact of having a resilient solution that’s flexible and that can keep up with challenging conditions in the market, is important. Whether you are working from home or in the office, we can help you adapt to that.”

Edoardo cited the US Treasury Space especially as an ION success story. The solution Edoardo and his team offers does not just improve the cost of entry into various venues, important though that is, but the ability to switch between different markets quickly and seamlessly. This is particularly important for traders who operate in different venues and geographies.

“A big success story of ours is in the US and in the US Treasury space specifically. In this market, in the last couple of years there have been several market structure changes with more venues offering liquidity, and offering it through different channels. These have led to incremental price improvements in some venues, which we can help our clients take advantage of. When, for example, you are sending an order to multiple markets, our aggregation tool automatically routes the order to the market offering the best price, taking measures to make your execution marginally better.

“We also have an innovative spreading solution for traders, where again our automated trading tools can result in marginally better prices. If you’re doing spreading, you’re able to expand the solution incrementally and take advantage of the vendors that are offering these prices. We can easily swap in or out of particular markets or venues you want to connect to as part of the overall solution. According to whether you have a relationship with a particular venue or you have a preference and you want to execute somewhere else, then you can pop them in or out, and still have access to a combination of markets throughout a single screen.”

The automation of processes within companies is also important. It is not only about the relationship between traders and the marketplace, but the internal relationship between company departments. Particularly in the case of sales and trading desks, this relationship is crucial for efficiency and optimal client outcomes:

“The use case is a bit different, but we also want to automate the workflow between the sales and the trading desk. This is something that generally is done in person. What we have developed in and what we have invested in in the last few years is a fully automated workflow where the sales team can interact with their trading team digitally. This means you can get prices more efficiently. You can also get additional information on the customer you’re trading with through analytics and historical trades on the site. So you have more context on your client.

“And then as a trader, you can get a voice inquiry from the sales desk as if it was from any other electronic market. Whether you’re trading with your sales desk or other counterparty on behalf of a customer, it’s exactly the same as trading on an electronic venue. This is very beneficial; the traders can manage all of these different inquiries in a much more efficient way.”

Edoardo frames this, and the success of ION, as an example of “amazonisation.” He defines this term as “having a very customer-centric approach, and being able to have solutions that are tailored to customers and offering these solutions quickly.” All of the information that ION presents to traders at the point of execution is amazonisation in practice. It is presenting disparate pieces of data together in a useful way, to inform the trader (and indeed client) to the greatest possible extent. Ultimately, the idea is that this enables better decision-making for all parties.

“When you’re trying to serve customers better as the market-maker in a particular asset class, you might want all sorts of information available. All of the historical information with the interaction you had with the customer. You want to see all of this information stored and visualised through analytics to support your decision. Now we also have a solution for the digitisation of unstructured data with natural language, related to discussions you have had with customers in different departments across the entire bank. If you can refer to that data and digitise it to present to your traders and for your sales at the point of decision-making, that is very useful. It can help you determine interest in a particular product, for example. We see that t this combination of data, both from electronic platforms and unstructured data brought together, can help with decision making.”

Looking to the future, Edoardo concluded by reiterating that ION will always be looking “to see what kind of solutions customers are interested in and follow these trends.” After all, the pandemic was a “catalyst” for moving entire processes online, accelerating a digitilisation process that had begun many years previously. It is certainly something that will spread to an ever-greater range of markets, industries and companies attempting to come to terms with the dynamism of global markets.

Author: Harry Clynch

#FixedIncome #Trading #Automation #Covid19 #USTreasury #Digitisation #Amazonisation