Automation in fixed income: Sorting the bluster from the bleeding edge
By Theo Normanton, Reporter, WatersTechnology
Automation is gaining traction in fixed-income markets, but use cases are limited and progress is slow. Market participants must overcome some uniquely human problems before they fully embrace the machine.
“Algos and rules-based trading methodologies are gaining popularity. Apu Shah, partner at 28Stone Consulting, explains that the primary function of such technologies is to trade odd lots and smaller trades, freeing up space on the trading desk by reducing the need to gather information and make the necessary evaluations. ‘It’s really a question of ‘shove it in the algo [and] if the algo says it’s worth trading, trade it.’ That gives the human traders time to focus on the higher-value trades, the 5-million-and-up type of block trades,’ Shah says.”
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