MTS Invests in Pre-Trade Data for Bond Trading

The initiative behind the partnership is to combine MTS' electronic trading technology with B2SCAN's pre-trade information aggregator and search engine in order to help buy-side traders to identify which bank is willing to buy or sell a particular bond, or list of bonds before to electronically execute their trades on MTS BondVision.

"We are collecting all the axes and we index them on our website. Clients have a search engine and can easily find the list of offers and bids that correspond to the bond they want to trade, which makes it much easier for them to get a full picture," says Frederic Semour, managing director at B2SCAN.

"Once we aggregate it all on our website, the next step is to go and execute the bond and this is one thing we couldn't do ourselves because the technology we would need to develop is too heavy. This is why we turned to MTS," he continues.

Taking Control Over Bond Liquidity
Fabrizio Testa, CEO of MTS, adds that many participants already believe that liquidity in the world's credit trading platforms has reached a tipping point. "The market is looking to forward-thinking technology providers to develop the tools to efficiently make pre-trade information, execution and post-trade data available," he says.

As the liquidity in the fixed-income marketplace has grown more scarce in recent years, the buy-side community turned to technology providers to help them fix the problem. But confidentiality is also a concern, and buy-side participants are not always willing to share their trading intention.

"What is very important is that B2SCAN ensures the banks remain in control of all of the dealers' data," says Simon Linwood, head of credit markets at MTS. "All the pre-trade information they can gather is very precious information to the buy side. It is extremely confidential for the banks and you need to show that you have all the securitiy and permissioning controls in place to protect them and the investors."

Indeed, according to Semour, the 15 banks that are now using B2SCAN have control over who look at their inventory and can decide to revoke this access at anytime.