As trading of these assets has become easier and market conditions are predicted to fall in line, the industry has seen a swathe of new EM-focused hires, increased attention paid to developing markets’ performance, and enhanced offerings from providers.

Across the industry more attention is noticeably being paid to this universe as the expectation of lowering dollar rates looms nearer, with the potential for new liquidity opportunities proving irresistibly appealing to market participants.

“There is a structural case for emerging markets, and it is set to remain a core part of the fixed income opportunity set,” asserts John Espinosa, head of sovereigns and portfolio manager for Nuveen’s global fixed income team. 

“It is currently 10% of the Bloomberg Global Aggregate Index, which is a bellwether that captures the world of global fixed income.”

The trend is our friend

The consensus appears to be that this is firmly an area where the best is potentially yet to come. As Jean-Charles Sambor, head of emerging market debt at TT International Investment Management tells The TRADE: “The emerging markets fixed income sphere is recovering, and we expect inflows back to the asset class after years of investor exodus.”

Dan Burke global head of emerging markets at MarketAxess and former global head of credit e-trading at Standard Chartered, agrees, confirming that from his perspective what started as a challenging year for EM is now turning into a favourable backdrop thanks to inflation starting to moderate globally.

Burke explains: “At MarketAxess, we have seen huge growth in local markets coupled with an increase in larger trade sizes. In Q1 of this year, our local market volumes were up 23% year-on-year, while trades larger than $25 million were up 23% in 2023. I expect this trend to continue throughout the remainder of the year as the macro backdrop improves and rate cuts are all but guaranteed.”

Notably this is an area characterised by its ebbs and flows, continually impacted by major global events including the pandemic, war in Ukraine, and the intense tightening of monetary policy.

Speaking to The TRADE, Niels Nooy, EM execution specialist at Liquidnet, says: “I have been involved in emerging markets since the early 1990s and have seen many market cycles over that period […] Traditionally, with higher interest rates, capital tends to leave emerging markets because there’s less of a need for the extra yield pick-up. Now, there is clearly more value in emerging markets in terms of real yields, so the timing is probably right for an improvement in sentiment at least, and maybe for some funds to flow back into emerging markets fixed income.”

Since last year EM fixed income was expected to do well however, currently market changes are yet to pass.

Geoff Yu, senior EMEA market strategist at BNY, explains that though the iFlow data showed that in Q1 some of the best performing regions were in frontier markets as investors rewarded reform intent, overall, despite a positive future outlook, [EM] hasn’t done as well as predicted.

“It’s fair to call it lacklustre […] the reason ultimately is because dollar rates are still quite high and then see if they come down and we don’t see US yields coming down aggressively yet for example,” he says.

However, firms are continuing to gear up for future flows into the area despite slow developments, recognising the consequences of not harnessing the potential of EM bonds and biding time for what many believe is the inevitable.

“Looking at the second half of the year, emerging markets stand to do very well, especially those without direct exposure to US politics or global politics in general […] the bottom line is we need to see a clear trigger, and then on a risk adjusted basis, the EM fixed income sphere should be one of the best-positioned asset classes for the second half of the year and beyond,” says Yu.

Diversify to liquify

There are undeniable, established upsides of this asset class which investors are keen to capitalise on once the market is primed. One of the key ways that emerging market fixed income is poised to become an increasingly essential part of investment portfolios going forward is of course for diversification purposes.

“The significance of EM cannot be understated, especially as the macro backdrop continues to improve,” asserts Burke. “The rise of capital flows from the Middle East are one example of the growing importance of EM, and as these markets grow, they will continue to allow greater diversification of EM portfolios.”

Not only is the asset class a highly efficient way of broadening scope, but emerging market bonds have also historically offered higher yields than developed markets and as such can help reduce the overall volatility of a portfolio – an increasingly important factor given the current state of play.

Speaking to the key advantages, Sambor explains: “We believe it is a particularly good fit for active investors with a contrarian slant. EM investment styles and processes are becoming increasingly bifurcated between large passive or quasi-passive investors and very nimble ones that can exploit a volatile environment and sudden changes in flows or investor asset allocations.”

Moreover, there is no looking back when it comes to emerging markets being increasingly integrated into the global economy and the continued promises of more aligned international processes.

These factors “improve visibility and attract a wider variety of investors,” asserts Flavio Paparella, managing director at BTIG global emerging markets fixed income, who adds that “local currency bonds are now as regular investments as hard currency bonds”.

Speaking to the increasing importance of emerging market bonds for desks going forward, Paparella highlights that the rapid economic growth of developing countries can re-value bond prices over time, enabling investment and infrastructure opportunities which further increase demand for bonds.

“Many emerging markets are implementing structural reforms to improve their business environment and the economic growth that comes with it can positively affect the bond markets,” explains Paparella. “Investors are challenged to be mindful about where to invest within emerging markets.”

Despite these positives, currently, markets are in a bit of a waiting game when it comes to the space, and are, for now, anticipating an inflection point, say experts. But, of course, there is more to come, and the market is prepping.

Espinosa affirms that though for the last five or so years EM has had an overhang – related to events such as the pandemic, geopolitical risks and rising rates in developed markets which has placed pressure on the asset class – the market is very close to the tipping point where those factors are waning.

“Traders are of course looking to maximise opportunities clearly and looking for an upside but how do you reconcile that with a challenging political environment or geopolitics? That’s always going to be an issue but our iFlow data shows that the EM fixed income sphere is just waiting for a trigger,” adds Yu.

Shifting strategies

Seemingly in preparation for this both firms and providers across the market are focusing in on how to take advantage of the space most effectively. One key way has been through new hires to push into new regions and establish internal processes.

“EM is a mosaic of sub-asset classes rather than a unified universe. It requires very different skills to trade EM FX versus rates or credit as the liquidity and price discovery mechanisms vary markedly. Desks that are designed to be nimble and opportunistic should be able to provide alpha through skilful execution,” comments Sambor.

In addition, several technology vendors have been incorporating EM bonds and enhancing their offerings in other ways to service client demand.

“As it is a very broad and growing segment of the market, it is driving managers to beef up their talent and resources. EM fixed income offers lots of benefits to clients from a risk adjusted return perspective, but it is not something you can beta efficiently. It requires resources to be able to invest effectively across a universe of 70 different countries,” explains Espinosa.

Various hires, new initiatives, and offering enhancements in the space have peppered the headlines in recent times. Recent examples include Fernando Ortega having been appointed head of emerging market sales at KNG Securities as part of its strategy of expanding in emerging markets across all areas of its business, and Paparella who joined BTIG’s fixed income group in July 2024 to help expand the firm’s presence across Latin America.

He explains: “Recently, more firms have expanded their emerging markets divisions in response to growing investor demand for diversification and higher-yielding fixed income assets. This involves hiring talent with specific skillsets and investing in dedicated infrastructure, including foreign offices, developing new platforms, and expanding marketing efforts.”

Various vendors have also continued to enhance their scope to meet investor demand for greater access to new jurisdictions, such as MarketAxess’ enhancement of its Open Trading platform to include a functionality focused on the local currency bonds of Poland, Czech Republic, Hungary and South Africa, and JP Morgan including Indian government bonds in its emerging market debt index.

Demonstrably, the asset class is growing with a swathe of firms moving to position their teams in the strongest position possible.

“Bank trading desks continue to add human and algo trading resources to the sector, and that paired with the increase in alternative liquidity providers is proving that EM can provide unrivalled liquidity,” asserts Burke.

A stock picker’s paradise

The emerging market fixed income sphere is not one, simple and homogeneous set. As an asset class it is a universe full of intricacies and niche knowledge. Though bolstered by rebounding economies, increasing globalisation and accessibility, what is key is knowing where – and how – to maximise opportunities.

“In this world, it is about selectivity. Emerging market fixed income is a bit of a stock picker’s paradise,” declares Yu.

But just how is this being enabled? As the EM investment community expands, of course so does the ecosystem which surrounds it.

The space, which by nature is fragmented both geographically and in terms of instruments, and thus complex, is being democratised through the enhancement of the systems. Namely, technological innovation through automation and electronification.

Nooy tells The TRADE: “Different regions and countries have different domestic rules about what you can and can’t do and what you can trade. On the currency side, you need to be able to settle locally which includes custodians, so it is not easy.”

Over time, as more of these sectors start getting traded electronically via different platforms the interest will continue to increase despite the fact that EM is lagging slightly behind developed markets.”

Of course, the extent to which e-trading is prevalent across emerging markets, and the processes which interact with it is yet to reach the same levels.

Burke confirms that “There has also been an increase of alternative liquidity providers within EM, specifically systematics and ETF providers. We’ve also seen an increase in portfolio trading activity in the market.”

He adds: “Clients are turning to our protocols like request-for-market (RFM) to execute larger trades. During the recent volatility in early August, our RFM volume was up 103%.”

When it comes to trading you must be acutely aware of what you’re dealing with, and emerging markets require particular focus. The minutiae of each jurisdiction and region in question requires a thoughtful approach.

Speaking to the specifics when it comes to the actual trading itself, David Everson, head of fixed income trading EMEA at Liquidnet, explains: “EM has always been an important part of our business as our dark pool protocol is well suited for trading those harder-to-trade names. If you look at the more illiquid bonds in the EM market, a dark pool is appropriate as you want to minimise information leakage and get trades done without leaving a footprint.  

“The EM market is so vast. If we consider the more liquid bonds in the EM market, it is full of potential. One of our protocols – Rebalance, our dealer-to-dealer electronic business – is suited for that. We see smaller trades in Rebalance while our dark pool is better suited to less liquid bonds and larger-sized tickets.”

Evidently, the emerging market fixed income sphere is trading. As Nooy adds: “In our new issue trading platform, our primary trading protocol, we’ve definitely seen a pick-up in emerging market issuance, which had been quite absent in the last year or two.”

For EM FI teams to be truly successful, what is required is comprehensive support in the form of efficient, up to date, and importantly innovative systems. It is a complex world which requires effective tools for risk management, data and information, to make the most of local processes and to take in relevant regulations and compliance requirements.

Paparella explains: “This complex set of needs has naturally driven the growth of the vendor industry […] In line with broader market trends, emerging markets benefit from innovative technology and platforms that enhance visibility and transparency. The increased availability of information is a game-changer.”

As a distinct asset class, EM fixed income is well positioned for a rebound as the investment community seeks alternatives offering higher risk and returns while maintaining appropriate levels of safety and transparency.”

As institutions demonstrably expand their remits through stronger teams and enhanced solutions, the message is clear – we’re getting ready.

This asset class is perhaps boundless, as the markets (and governments) in question continue to evolve and face increasingly unpredictable times. To maximise opportunities in the space, the time for preparation is now.

The post Don’t sleep on emerging markets fixed income appeared first on The TRADE.

Lisa Schirf

Launched 40 years ago, The WGBI measures the performance of fixed-rate, local currency, investment-grade bonds and comprises sovereign debt from over 25 countries, denominated in a variety of currencies. 

Tradeweb FTSE Closing Prices are expected be included in March 2025.

“The World Government Bond Index is FTSE’s flagship global index and a leading global benchmark for fixed income markets,” said Lisa Schirf, global head of data and analytics at Tradeweb.

“The inclusion of Tradeweb’s benchmark closing prices in FTSE’s indices validates our continued commitment to develop the next generation of fixed income pricing and index trading products for traders and investors worldwide.”

These benchmark prices can be used in index construction, as well as reference rates for a broad range of use cases, including trade-at-close transactions and derivatives contracts.

In addition to providing benchmark closing prices, Tradeweb stated that it plans to bolster electronic trading functionality for FTSE Russell fixed income indices and customised baskets.

For clients seeking to efficiently express a view on FTSE Russell indices and baskets, Tradeweb added that providing enhanced trading functionality can help efficiently manage what are often their largest and most critical trades.

“We’re pleased to announce the price source change within our global fixed income indices to include Tradeweb FTSE closing prices for these significant global rates markets,” said Scott Harman, head of fixed income, currencies and commodities at FTSE Russell.

“It ensures our indices continue to incorporate transparent, representative data sets across the diverse universe of fixed income markets that they track. Additionally, FTSE Russell’s benchmark administration of these prices brings a new level of transparency and rigorousness to the valuation of fixed income markets and our indices.”

The post World Government Bond Index to include Tradeweb FTSE benchmark closing prices appeared first on The TRADE.

The desk is live and fully operational and specifically aimed at facilitating more efficient trading for EU-based clients across both fixed income and equity markets globally, focusing on streamlining the firm’s offering across different regional markets. 

Adam Vos

Adam Vos, global head of markets at BNY, explained: “Expanding into the EU is a direct response to the growing demand from our EU-based clients for execution services. The addition of our new team in Ireland enhances our ability to offer seamless and efficient services.

“We’re committed to strengthening our international offering of execution services and meeting the needs of our clients in the EU and beyond.”

The development enhances BNY’s operational ecosystem execution services offerings in Europe. Solutions include comprehensive execution to custody for BNY’s Markets, Pershing and Asset Servicing clients.

Bianca Gould, head of equities and fixed income EMEA, markets, at BNY is set to lead the execution services offering across the region. 

Read more: BNY Mellon names new head of fixed income and equities EMEA and head of US fixed income

Paul Kilcullen, country head of Ireland at BNY, explained: “Clients can execute equities and fixed income with enhanced support across time zones by BNY’s global team. This is a key milestone in our international growth strategy, which will have a positive impact on Ireland’s growing role as a key financial hub in Europe.”

The post BNY goes live with new trading desk in Dublin appeared first on The TRADE.

Andy Mahoney

Specifically, T.Rowe Price is live on Propellant’s Digital’s fixed income transparency data offering via FlexTrade’s fixed income EMS, FlexFI. 

Speaking to The TRADE,  Andy Mahoney, managing director, EMEA, FlexTrade, asserted that the firm has seen the adoption of EMS solutions on fixed income trading desks continue to grow this year, with expectations for this to accelerate further into 2025.

He adds: “The drive for this deployment is twofold. Firstly, the continued electronification in fixed income and the need to handle increasingly sophisticated data sets have seen desks needing technology to handle their bond trading activities efficiently.

“Outside of this, we also see broader-scale transformation initiatives to rationalise and streamline multiple asset class-specific EMS solutions to a single, scalable platform to provide a common set of cross-asset tools, processes, and automation logic across equities, fixed-income, FX, and derivatives trading.” 

Propellant Digital’s solution is used by both global and regional banks, as well as asset managers, quant hedge funds, trading venues, regulators, and industry associations.

Through the availability of Propellant’s insights alongside other internal and external data sources within a single interface, FlexFI users benefit from enhanced processes “without leaving the context of their fixed-income trading blotter,” said the firms.

Specifically, T. Rowe Price’s fixed income trading teams can now view a comprehensive dataset within the FlexFI Order Blotter, which includes real-time market activity, historical trade prices, and aggregated trade volumes.  

Vincent Grandjean, chief executive of Propellant Digital, tells The TRADE: “Integrating our pre-trade analytics into FlexFI EMS allows their team to access a full market view without leaving the order blotter. In addition, our technology can support them in both TCA and research efforts. Our solution is well-placed to help firms like T. Rowe Price stay ahead in their data journey.”

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Through this collaboration, Charles River Development can now participate on Glimpse sans technology integration, sharing their fixed income data across the Glimpse network.

The partnership also allows users to consume Glimpse post-trade data feed and dealer rankings directly in the Charles River OMS at zero cost. 

“This collaboration marks a significant milestone for both current and future Glimpse members, enhancing their ability to share trade data, gain deeper insights, and further increase transparency in the fixed income markets.

“[…] This is a game-changer for our network and a huge step forward on our journey to democratising data access for the buy-side,” said Glimpse speaking in a social media announcement. 

Read more: Glimpse Markets and Wave Labs extend relationship with new strategic partnership 

Other notable firms to join Glimpse recently include KBC Asset Management, T. Rowe Price and Andra AP-fonden.

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The CTP for shares and exchange traded funds ETFs will initiate in June 2025 with plans for a decision on by the end of 2025.

This in keeping with the previously confirmed timeline wherein ESMA confirmed it would be no more than six months after the launch of the selection procedure for bonds.

“Today’s announcement on the launch dates of the first selection procedures for the CTP for bonds and equities aims to foster a successful competition with multiple solid offers in transparent and fair selection procedures,” said ESMA.

Specifically, the “reasoned decision” on the selected applicant will adhere to the rules applicable to concession contracts (outlined in the Financial Regulation – EU, Euratom 2018/104636), which prescribes the steps and timelines to follow.

Read more: ESMA publishes new public consultations as Mifir review continues

Contract notice and procurement documents will be published on the EU Funding & Tenders Portal on the respective launch dates.

“Prospective applicants are invited to register and familiarise themselves with the Portal. In the coming weeks, ESMA intends to share additional guidance on the assessment of exclusion criteria,” confirmed the watchdog. 

Last December, Etrading Software confirmed plans to bid to become the consolidated tape provider (CTP) for both the UK and EU as the UK’s Financial Conduct Authority and European Securities Markets Authority (ESMA) continued with data consolidation plans.

The move followed news that the Bloomberg, MarketAxess and Tradeweb JV for a CTP bid had been scrapped due to “various developments”.

Following confirmation, it would enter the tender process to become the UK’s consolidated tape provider for fixed income, Ediphy has also confirmed its intention to bid for the European fixed income tape as well.

Last year a JV between major exchanges across Europe announced the incorporation of the new company, EuroCTP, through which the participants aim to bid to become the EU’s equities and ETF consolidated tape (CT) provider.

Read more: Battle lines are drawn over European consolidated tape project

Throughout the application periods, ESMA has confirmed it will be available to field questions from prospective bidders with applicants “granted as much time as possible, within the boundaries of EU procurement rules, to provide details on their projects”.

The post ESMA to pick bond CTP by July 2025 appeared first on The TRADE.

The initiative was established to further develop BondVision, a multi dealer-to-client (D2C) trading platform for rates, credit and repo, alongside promoting competition within the market.

“Sustainably competitive and straightforward” fees will be introduced by the initiative for all BondVision dealers.

This will incentivise improved service levels to clients from supporting dealers as they tap into the benefits offered, while also building on MTS’s market presence, dealer and end-user network, and proprietary technology.

The top ten BondVision dealers support the initiative’s underlying principles. This includes: Barclays, Bank of America, BNP Paribas, Crédit Agricole Corporate and Investment Bank, Citi, Deutsche Bank, JP Morgan, Morgan Stanley, Nomura and UniCredit.

“MTS is a critical component of Euronext’s growth ambitions for the coming years,” said Stéphane Boujnah, chief executive and chair of the managing board of Euronext.

“The initiative announced today with Euronext’s longstanding partners demonstrates our commitment to adapt our solutions to meet the evolving needs and priorities in the fixed income world”.

As a subsidiary of Euronext Group, MTS is committed to investing in talent and technology to support the initiative.

“We are excited to support this initiative as it fosters innovation, which has benefits for the entire European bond market,” said Pierre Morel, global co-head of investment grade trading at JP Morgan.

“By addressing key concerns like cost pressures and enhancing data use provisions, BondVision improves efficiency and delivers significant advantages to all market participants.”

The post Euronext’s MTS partners with BondVision on growth initiative launch appeared first on The TRADE.

Anthony Attia

The new index family consists of 26 indices that measure the total return of Euro-denominated government bonds from ten Eurozone countries, deriving from the mother index Euronext MTS EGB Broad GR.

The new index family will use prices from MTS Cash trading platforms, ensuring a level of transparency and replicability that is unique in the bond market.

Euronext added that all European government bonds available for trading on MTS’s dealer-to-dealer regulated markets are eligible for inclusion in this family of indices.

Versions for all Eurozone countries, fixed coupon instruments, single-country indices, and other customised indices, are included in the index family.

“We are proud to launch this family of 26 European government bond indices, further solidifying our position as a leading index provider,” said Anthony Attia, global head of derivatives and post-trade at Euronext.

“By leveraging MTS’s high-quality trading data, we are broadening the range of investment solutions available to our clients, helping them deploy capital in European fixed income markets with greater efficiency.”

Elsewhere, Euronext and MTS are launching the Euronext MTS EU Gross Return Index, supported by MTS’s role as a DMO-designated interdealer platform for EU primary dealers, offering improved price transparency to investors.

The Euronext MTS EGB Index Family, reviewed monthly, is ideal for ETFs, investment funds, and as a reference for further customisation and sub-indices, added Euronext.

The index family is designed to support both active managers and those with passive fixed income strategies.

“Our position as Europe’s leading electronic fixed income trading platform ensures the highest level of price transparency and accuracy, providing investors with robust and reliable benchmarks,” said Angelo Proni, chief executive at MTS.

“The launch of Euronext MTS EGB Broad Index Family demonstrates our commitment to the European fixed income market.”

The post Euronext and MTS launch new European government bond index family appeared first on The TRADE.

The completion of the transaction is subject to regulatory approval and closing conditions. StoneX will acquire 100% of Octo Finances SA shares once complete.

The move is designed to expand StoneX’s capabilities in fixed income and grow its presence in Europe, with a particular focus on France.

 “This acquisition further expands our growing distribution network by over 500 clients, including banks, insurance companies, private debt funds, mutual funds and private wealth managers,” said Anthony Di Ciollo, global head of fixed income at StoneX.

“Octo Finances is a highly respected French brokerage firm known for its excellent client service. We are committed to fully supporting its growth and extending our products and capabilities to its high-quality client base.”

Fixed income broker Octo Finances is in Paris. It specialises in bond and convertible sales, debt capital markets and credit research.

 “Joining StoneX is a natural fit for Octo Finances,” said Talabor Szabo, chief executive and co-founder of Octo Finances.

“StoneX’s commitment to innovation and client service aligns perfectly with our values and vision for the future. We are thrilled about the new opportunities this acquisition will bring and are eager to work together to enhance our offerings and grow our presence in the market.”

StoneX has been ramping up its fixed income offering with several new hires in recent months, most likely in preparation for its upcoming deal.

Among the new hires is former head of trading at Incline Global Management, Evan Halpern, who was named managing director of fixed income outsourced trading in January.

More recently, StoneX Group appointed Simon Pickworth – former MUFG – a s an institutional fixed income trader for the Central and Eastern Europe, Middle East and Africa (CEEMEA) region in April.

The post StoneX to acquire fixed income broker Octo Finances appeared first on The TRADE.

The move follows Groupama Asset Management and Amundi Intermediation’s strategic partnership, announced in May, which saw the firms merge their trading capacities to enhance trading efficiencies.

Both moved to Amundi on 1 September, The TRADE understands.

The Paris-based traders previously worked under head of the trading desk at Groupama AM, Eric Heleine, and will now report to Christophe Marcilloux, head of fixed income dealing at Amundi Intermédiation. 

Read more: Fireside Friday with… Groupama Asset Management’s Eric Heleine

Elsewhere in her career, Sueng – one of The TRADE’s Rising Stars in 2019 – worked in fixed income sales at both Tullet Prebon and Newedge as well as previously serving in fixed income performance analyst roles at Amundi and Societe Generale Asset Management.

Prior to joining Groupama AM in 2023 as a fixed income trader, Nakache worked in front-office roles at Agence France Trésor and Unibail-Rodamco-Westfield. He has also previously served at firms including Credit Agricole CIB, Beijaflore, and Societe Generale.

The TRADE has also learnt that the transfer of other traders is also planned to take place before the end of this year.

More to follow…

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