MTS Expands Delivery Options for B2Scan Bond Inventory Data

In January, MTS announced an initiative in partnership with French fixed income technology provider B2Scan, to supplement its raw BondVision data with pre-trade information on banks' bond inventories, which allows buy-side traders to identify which banks are willing to buy or sell a particular bond or list of bonds.

The information is sourced by B2Scan, which also provides a web-based engine for users to search the data-for example, they can search for a specific sector and maturity, and B2Scan provides a list of banks with positions available.

MTS chief executive Fabrizio Testa says the project with B2Scan is now coming to delivery, meaning that MTS' buy-side customers can now search for specific instruments and receive a list of dealers who have positions available. "This is a more efficient and informed way to trade. By facilitating searches and matching demand with axes from a bank's inventory, we can improve hit ratios and reduce execution times," he says.

In addition to B2Scan's web platform, MTS has now created a range of new delivery mechanisms for the data to cater to different levels of technological sophistication among user firms, including a real-time API using the FIX Protocol or the LSE's own proprietary data format; via third-party market data vendors; and through MTS's standard front-end trading interface, while non-real-time data can be delivered via FTP download.

Testa says the fixed income market is currently in an "evolutionary phase," as more trading becomes electronic. Recent estimates from research and consultancy firm Celent suggest that electronic trading of bonds has recently overtaken voice trading for the first time. "So we needed to provide solutions at the lower and higher end of the [electronification] scale," he says. "Fixed income is lagging behind equities and derivatives when it comes to electronification, but the advantage of having other asset classes go first is that you can see what works well and what doesn't, and adapt it to fixed income."

By accessing the B2Scan data via MTS's delivery methods, buy-side firms no longer have to spend time and resources sourcing information on banks' bond inventories themselves, while banks can reach customers more easily. "There's no concern about sharing inventory data with the buy side. MTS B2Scan gives dealers full control of who sees their data without the threat of information leakage," Testa says.

In addition to supporting technological advances among fixed income trading firms, MTS is also preempting upcoming regulations likely to drive more bond trading onto electronic markets, Testa says. Supplementing its raw data with additional "color" and making the pre-trade process as transparent as possible will provide additional value to traders, he adds.