Axess IQ: Smarter Execution for Private Banks and Wealth Managers

This post is all about execution performance. Well, actually, it’s also about efficiency -  and how to achieve execution performance in the most efficient way. A combination that many consider mutually exclusive. Here’s the good news: while it might look rather tricky, it is possible with the right tools.

Smarter Execution = the perfect confluence of alpha generation and workflow efficiency

In my previous life, I spent many years at the central fixed income execution desk of a global wealth manager. During that time, I wore many hats – project manager, product owner, execution trader, team lead, and head of desk.

All these roles had one common objective: to build the best-performing execution desk possible. A desk capable of executing hundreds, even thousands, of individual client orders daily – efficiently and under any and all market conditions. A desk capable of delivering best execution to our end clients at any point in time. We consistently strove to go above and beyond to produce superior trading results for every single client.

Yet the trade-offs and challenges were always there: Quality vs quantity; Higher alpha vs less cost; The age-old problem of squaring the circle. While this was proven mathematically impossible more than 100 years ago, I think we may have found a solution for the execution desk. We call it Axess IQ. Before I tell you about it, though, let me briefly summarise why it even needs to exist.

Solving the challenge of high-volume execution desks

Large private bank execution desks are typically high-volume, with a diverse and rather unpredictable mix of client orders streaming around the clock. Orders range from small retail sizes to big blocks, from liquid sovereign names to exotic emerging market bonds. Many of these orders have accompanying limits that require constant monitoring, sometimes spanning several days or even weeks.

I found that managing this unique process, while trying to simultaneously realise execution alpha, was only possible with a clear focus on the overall workflow. A holistic approach that takes into account the entire execution process from start to finish and addresses the challenges at each step.

What I think smart execution looks like

It all begins with the analysis of the order queue: the continuous monitoring of all open orders, many with a limit. Then analysis, aggregation & visualisation of relevant market data, and flagging of short-term execution opportunities. And, finally, intelligently identifying and grouping orders into no-/low-touch automation and high-touch manual trading buckets.

In other words: understand the market context for every individual order. This is imperative because it allows for price and liquidity discovery as well as the correct prioritisation and timing of actions. Ideally, this shouldn’t have to be done manually or order by order, but rather automatically, continuously, and simultaneously for every order.

When it is time to execute, let data guide traders to the optimal execution strategy, the most suitable execution style and protocol (Request for Quote, Request for Market, place as resting order etc…) and to the liquidity pools and providers, either manually or assisted by automation.

Finally, it is the execution desk’s fiduciary duty to demonstrate best execution. Recent regulations demand transparency across the entire trade lifecycle and in order to meet these requirements, best execution controls need to be seamlessly integrated with the order workflow and have access to all execution related data.

Axess IQ allows execution-alpha and efficiency to go hand-in-hand

In Axess IQ, we’ve built our ideal workflow into a single, intelligent, data-driven tool. A one-stop-trading-shop for wealth managers and private banks. Axess IQ manages and monitors open orders, aggregates liquidity & price data into a single view, and provides a unique platform for data-driven trading.

It allows you to monitor, manage and prioritise all incoming orders; synthesise and distil best-in-class pricing data, including our award winning algorithmic predictive pricing engine Composite+. It also flags opportunities when it sees them and helps you intelligently identify automation potential. So, as a trader, you can always focus on those tickets that require your full attention and expertise.

It optimises execution efficiency by seamlessly integrating with Auto-X™  our intelligent fixed income auto-execution workflow and connecting directly to MarketAxess liquidity. Including 1,700+ investor and dealer firms via our Open Trading™ marketplace. The ease and sophistication of the execution will astound even the most sceptical trader!

Axess IQ is now live in a first pilot phase. While still early days, the pilot program is allowing us to refine and enhance the product– ensuring that it meets client needs as perfectly as possible.

Naturally, as the Product Manager for Axess IQ I am excited about nurturing the solution from its infancy and to see it up and running at trading desks is exciting. But what I have enjoyed most is working with our clients – many are old friends after all – to ensure we deliver a solution tailor-made for traders.

Back in my trading days, I recall that MarketAxess always excelled in listening to me and my fellow traders and built products to suit our specific needs. Now that I’m ‘on the other side,’ I’m looking forward to continuing this tradition by building a solution for execution traders, that is crafted by execution traders.