The evolution of the fixed income business forms the subject matter of a paper by BNY Mellon subsidiary Pershing. Moving a traditionally relationship-driven and voice-executed market to a new forum is no easy task, according to European Fixed Income–Advent of the Platform.
Issuance is soaring but liquidity is withering as banks withdraw due to Basel III’s stringent capital adequacy ratios, observes Pershing. New platforms not only have to offer the right functionality to suit different products but also ensure robust pre and post trade systems are in place to meet impending regulations such as MiFID II.
Scott Coey, head of broker-dealer services EMEA at BNY Mellon, says that the breadth and complexity of fixed income as an asset class opens the field to a greater variety of models, and that with competition from new entrants, the large players are reconfiguring their models. “Smaller players with niche areas of expertise will continue to carve out a role and fill a gap for asset managers who feel they are being neglected by the bigger banks,” he comments.