FIX Protocol Tool Kit

Lunch and Learn

e-Commerce in the Fixed Income Markets

The Bond Market Association 2005 Electronic Trading Survey

Summary

Background

The Bond Market Association has conducted the survey every year since 1997

54 organizations participated in this year’s survey; some operate more than 1 platform

Survey focus Who the platforms are and who they trade with

Inter-dealer (29) Multi-dealer to customer (19) Single dealer to customer (22)

Methodology/technology used for price discovery and execution Request For Quote - RFQ (26) Order Driven (33) Cross Matching (27) Auction (11)

Electronic Trading Leads to Price Transparency

Most platforms allow participants to see executed prices Many platforms make prices available to non-trade

participants and data vendors Over 3 in 4 publish executable quotations Request For Quote method widely used in multi-

dealer to customer platforms, enable investors to see multiple executable or indicative quotes at the same time on a single screen

Some platforms enable customers to see prices from third party sources such as MSRB and TRACE

How Many Platform Participants

First year the question was asked Of those who responded, answers varied

The largest platform reported 7,600 investors Four reported >1,000 Five reported 500-1,000 Seventeen reported more than 100 registered

institutional investors Liquidity providers

32 had dedicated providers Eight had more than 25 Average of 14 among those with less than 25

Platform Volume Metrics

Average trade size ranged from $25,000 to $15 million

The Bond Market Association estimate: daily cash market trading volume average: $750 billion in U.S. and Europe

Growing volume 48 reported volume change in 2005 from 2004

35 reported increases 14 reported at least a 20% increase 4 between 10% -20% increase

Clearance and Settlement Services

Most (29 of 54) provide direct access to trade settlement

Reported links to a number of trade clearance and settlement services including DTCC, NSCC, GSCC, Euroclear, Eurostream

and Bloomberg

Who are FIX Compliant

FIX Version 4.4 came out in 2003 following extensive collaboration of Bond Market Association members, platform vendors and Fix Protocol Association members

17 indicated they were FIX 4.4 compliant Survey asked about the future; leading themes

included: Further 4.4 adoption Refinement of Application Program Interface “Connectivity hubs” for communication among market

participants and trading systems

Electronic Trading Platforms and FIX Protocol

Platforms not using FIX Protocol

68%

Platforms using FIX Protocol

32% Multidealer60%

Interdealer40%

Source: The Bond Market Association