Unlocking the automation suite of technology

In the ever-evolving landscape of fixed income electronic trading, automation technologies are quickly gaining popularity as a necessary trading tool. In our last blog on automation, we discussed how the MarketAxess automation toolkit has seen rapid growth in the recent past, even through times of volatility. In that blog, we touched on the expanded toolkit and how those tools are developing to meet the growing needs of our users. As the automation suite has advanced, we are finding more ways to trade (aggressing vs. passive), more rules to manage (custom rule design and algo hot buttons), and more order types to measure (resting orders and pegged order types). Clients are using this information to not only enhance best execution practices, but to improve automated trades with quantifiable, value-add analytics. Whether it's achieving greater capacity and efficiency savings or enhancing execution quality through passive trading competitiveness, our solutions are designed to cater to your unique needs.

Engaging with the automation toolkit is not only a positive return on trader time, but also enhances overall investment process from order generation to execution to settlement. We also recognize that real-time analytics can significantly enhance trading strategies right at the point of execution. This paradigm shift is redefining the way traders approach their objectives, leveraging the power of data to make split-second decisions. This is being furthered by the creation of trading signals deployed through Adaptive Auto-X™ which will assist clients for a given objective.

Our suite of innovative tools and services enables traders to not only meet best execution, but also take it the next level. Our proprietary Auto-X RFQ Hypothetical, a powerful tool that meticulously assesses a client's historical trading data, compares the outcomes of trades against a predefined Auto-X parameter set, and allows us to provide invaluable insights. This analysis not only reveals which inquiries qualify for Auto-X RFQ under the specified parameters, but also quantifies how effective they would have been in terms of hit rate and execution performance. This capability is a game-changer for both first-time automation clients looking to set realistic expectations as well as experienced automation clients seeking to refine their strategies with data-backed precision.

Another tool that helps enhance execution outcomes is Auto-X Responder Hypothetical, which examines a clients overall activity, and helps frame the passive opportunity with each client’s flow profile—clients can evaluate whether they would have won bids and calculate the resulting savings had they executed aggressively versus passively.

We've introduced a “rules waterfall” approach to Auto-X RFQ, also known as custom rules, which allows clients to tailor their execution and eligibility criteria sets to suit their specific market needs. This customization lets clients establish a set of rules with the confidence that comes from scrutinizing these rules closely, and MarketAxess plays a crucial role in assisting clients in defining these rules by dissecting diverse data cuts. The result is a more granular rule set, heightened confidence in their application, and the shifting of risk into the automation landscape, especially in handling larger risk transfer, including liquid blocks.

Intratrade, a key focal point of development in 2023, offers point-of-trade transparency, including valuable insights into liquidity and tradability scores and CP+ pricing. The MarketAxess user interface now empowers our clients to efficiently manage and organize their Adaptive Auto-X activity in a user-friendly manner.

The demand for analytical support tied to resting orders has surged alongside the rise of algorithmic trading. Clients now require more comprehensive working order analytics, covering performance aspects such as trading benchmarks versus shortfall, spread capture, and TRACE. These critical metrics are seamlessly integrated into our Adaptive Auto-X dashboard, enabling clients to monitor the interval performance of their grouped orders and baskets in real time. These analytical tools not only optimize order performance but also safeguard against adverse trading conditions, such as defensive limits, ensuring a smarter and more secure trading experience.

Within this data-rich landscape, MarketAxess offers comprehensive trader and trade management support. Our services encompass various critical aspects, including best execution evidence to ensure compliance with criteria processes, centralizing parameter governance for consistent rule application across desks, and conducting anonymous peer analysis to gauge our clients' fiduciary performance relative to peers. We’ve heard that clients find the most value by delving deep into their automation outcomes. By stepping back and examining larger data samples, they can discern trends, evaluate the significance of outputs, and take informed actions. These decisions are not only made but also meticulously measured, creating a feedback loop that continually drives improvement and refines the automation philosophies of some of the largest clients.

The road to achieving the best automation outcomes in today's rapidly evolving landscape requires harnessing the power of analytics that surround client activity in this dynamic space. As algorithms continue to advance within the fixed income credit, we’re committed to modernizing our analytics to empower clients who are seeking even better outcomes. At MarketAxess, we remain dedicated to facilitating this journey, supporting our clients in navigating the complexities of automation while ensuring they have the insights and tools needed to excel in an ever-changing market. The future of trading is dynamic, and we're here to help clients navigate it with confidence.