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