Sourcing liquidity through a connected ecosystem
Liquidity in fixed income markets spans multiple protocols, venues, and workflows, expanding across request-for-quote (RFQ), portfolio trading (PT), centralized order books, and peer-to-peer models. This fragmentation has created complexity for both buy-side and sell-side participants and a challenge in how to access the right liquidity at the right time. The most effective approach is a cohesive ecosystem that combines protocols, partnerships, and data.
At MarketAxess, we offer a variety of protocols that allow participants to seamlessly transition between execution styles, whether taking liquidity via RFQ, providing liquidity through Open Trading® (our global, all-to-all electronic marketplace) or leveraging PT workflows. Routing is intelligent between protocols and understands when to engage one dealer, a select group, or a broader network. Innovations such as our Opening & Closing Auctions protocol pools buy and sell orders across the platform to concentrate liquidity during the most critical times of the day, improving execution outcomes and transparency.
To further enhance connectivity across liquidity pools, we have prioritized integration with client workflows and strategic partnerships. For example, our partnership with DirectBooks connects primary issuance with secondary trading, enabling a more seamless transition from new deal indication to secondary market execution. It also addresses the disconnect between issuance and trading liquidity, which remains one of the key inefficiencies presented by the fragmentation in fixed income markets today.
In parallel, we are continuing to deepen integration with OMS/EMS platforms, allowing clients to maintain flexibility while accessing multiple liquidity pools. Traders can interact with diverse liquidity sources without unnecessary information leakage, all within existing workflows. This interoperability is critical in building a more seamless and scalable trading environment.
Across many client discussions about liquidity, one point is consistent: “It’s all about the data”—specifically, how data informs execution decisions such as dealer selection, protocol choice, and timing of trades.
We have invested heavily in proprietary datasets and analytics tools to improve liquidity discovery. AI-driven solutions, such as our pricing engine, CP+™, provide real-time insights into market depth and execution costs. CP+ sources proprietary trading information not only based on executed trades but also on the stack of inquiries and responses that did not trade, resulting in more accurate pricing and thereby enhancing pre-trade decision-making. Another data tool is AI Select, which helps clients optimize counterparty selection. Instead of “blasting” inquiries broadly, traders can engage a curated set of counterparties, improving response quality by only sending the inquiry to the counterparties most likely to respond.
The liquidity challenge in fixed income trading can be addressed through a combination of integrated connectivity across platforms and workflows, driven by real-time analytics and data-informed execution strategies, and strategic partnerships that bridge liquidity across markets. Together, our approach creates a seamless ecosystem for accessing the right liquidity at the right time.
Interested in learning more about the protocols and tools I mention here? Join me at FILS on June 16th at 10:05am as I dive into the intricacies of these liquidity challenges on the session titled, “Evaluating Strategic Partnerships: How Can You Ensure Consistent Liquidity Across Fragmented Markets.”