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.”

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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.”

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Sollom brings more than two decades’ experience in financial trading and market strategy to the firm.

He joins from Element Capital, where he founded the London execution desk.

Prior to that, Sollom spent six years at BlackRock, as director and senior fixed income trader, co-leading the execution of interest rates trading, cash and derivatives.

He began his career at Fidelity Institutional Asset Management in 1998, managing institutional client relationships.

Following this, he moved to Cazenove Fund Management as a government and corporate bonds trader and then to Henderson Global Investors as a senior dealer of fixed income.

Elsewhere in his career Sollom established Wellington International Management’s first London trading desk for the firm’s global fixed income trading division, focusing on rates, credit, local EMD and FX trading.

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The session was run on 20 June and was a 3 month vs 6 month EURIBOR (3m/6m) basis session, which executed trades across several participants and tenors.

The new functionality compliments MTS Swaps, a digital interdealer trading venue for interest rate swap dealers (accessible through a web browser via Wematch.live) which was announced in February this year.

Users are able to manage their risk across their IRS portfolios during regularly scheduled risk netting sessions in 3m/6m, €STR/EURIBOR, and Eurex/LCH basis.

Steve Schiff, head of risk netting services at Wematch.live highlighted the “significant milestone” represented by the launch, and its role in enhancing liquidity in the interest rate swaps market.

“The session-based functionality of the Service enables participants to effectively manage risk in bulk across their portfolios, fostering efficiency and mitigating PnL volatility: we are proud to be at the forefront of innovation and look forward to further collaboration with MTS as we build out new liquidity pools for the rates market,” he said.

According to the businesses, The MTS Swaps Risk Netting Service is the only platform for automated risk netting of IRS inclusive of trading constraints, PnL controls and contingencies.

MTS – part of Euronext Group – has also announced plans to launch dealer-to-client RFQ trading functionality for IRS, BondVision Swaps, expected early next year.

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MTS Swaps, which is accessible through a web browser via Wematch.live, digitises voice trading workflows while also bridging the gap between legacy voice trading models and pure electronic alternatives through an offering of negotiating functionalities.

MTS Swaps will offer dealers increased efficiency and productivity through automation, reduced conduct risk through transparent electronic audit trails and the removal of chat from workflows, as well as improved trade protection through pre-trade price and size controls and auto-protect features. 

IRS trading costs will also be reduced by the solution through a simple and transparent fee schedule and a choice of ‘all-you-can-eat’ or ‘pay-per-trade’ fees.

“There has been a major structural shift toward electronic trading in the interest rate swaps market since the introduction of new regulation in the wake of recent macroeconomic uncertainty,” said Angelo Proni, chief executive of MTS, Euronext Group.

“MTS Swaps combines MTS’s network, regulated markets, connectivity, and rates franchise with Wematch’s flexible, agile technology to deliver an innovative solution that puts the trader front and centre.” 

The new solution will benefit from MTS’s network across Europe, which trades an average daily volume of over €160 billion, and Wematch’s platform that bolsters the digitisation of dealing workflows.

MTS’s regulated markets and MTFs connect to relevant post-trade systems including central clearing houses.

“Wematch is on a mission to empower financial institutions through digitisation. Our cross-asset platform is designed to serve dealers with ease and efficiency,” said Joesph Seroussi, chief executive and founder at Wematch.

“We remain committed to delivering robust and scalable alternatives to voice trading, and are thrilled to announce the launch of MTS Swaps by Wematch.live in partnership with MTS.” 

Anna Lucarelli, European head of corporate and public sector rates sales ex DACH at Deutsche Bank, added: “We see clear value in this new proposition from MTS and Wematch, with the opportunity to accelerate dealing workflows and help firms to increase productivity and reduce costs.”

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Following a strategic review initiated following its integration of Borsa Italiana and the decision to “divest from non-core assets”, Euronext has moved to sell off its US MTS subsidiary, MTS Markets International (MMI).

MMI is the operator of MTS BondsPro, an electronic credit trading system that liquidity access and real-time execution on its anonymous, all-to-all order book.

“Euronext was not the best player to continue to grow MMI which is a US based business primarily targeting trading of US corporate bonds,” a spokesperson from Euronext told The TRADE. 

The exchange confirmed that the remaining MTS businesses were still central to its strategy.

Euronext acquired MMI as part of its 2021 Borsa Italiana acquisition. The exchange agreed to acquire Borsa Italiana from the London Stock Exchange Group for €4.4 billion to alleviate concerns around the exchange’s landmark $27 billion takeover of Refinitiv.

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Wave Labs, founded by Miles Kumaresan in 2018, has made various partnerships as it prepares to begin a three-month phase of controlled trading with one or two asset management clients before the platform goes live in September.

Known as eLiSA (Electronic Liquidity Seeking Application), the execution system is now certified to send dealer request for quotes (RFQs) via APIs with Bloomberg and UBS BondPort. Connectivity to MTS, now owned by Euronext, has also been completed with certification pending.

Wave Labs is also working on a connectivity to the ICE Bonds ecosystem, which includes the BondPoint and TMC Bonds platforms, which exchange operator ICE acquired several years ago. The start-up is also hoping to connect with Tradeweb and other sell-side institutions to provide clients with tradeable streaming prices.

Speaking to The TRADE, Kumaresan said partnerships with venues can be a major hurdle for new entrants as start-up platforms are expected to have clients before connecting to venues, but in most cases need clients before gaining access.

“We have been very fortunate to have so many buy-side backing eLiSA,” he added. “eLiSA is in fact a product that is shaped by these backers. Every single one of them have contributed to taking eLiSA to where it is now.

“An eLiSA demo is typically a mini-brainstorming session. Shortly after a recent demo, I received an email detailing request for new functionality. Within 48 hours, we had implemented a first cut of this feature and got back to the trader who had asked for it. This is what it is all about for us, to create a technology that the buy-side has actually asked for.”

Kumaresan added that as eLiSA specialises in credit trading, Wave Labs will connect to major execution systems that cover all areas of fixed income trading. He confirmed that work has already started on connecting the platform with Bloomberg TSOX and other EMSs on behalf of clients.

Highlighting the importance of system interoperability as an emerging trend between established players and specialist start-ups entering the space, Wave Labs also teamed up with IHS Markit and integrated its cross-asset order management and portfolio modelling system (PMS) thinkFolio.

“Enhancing trader user experience and delivering capabilities that facilitate collaboration with portfolio management are key focus domains for thinkFolio,” said Brett Schechterman, global head of thinkFolio at IHS Markit. “Wave Labs have developed a highly complementary workbench and market intelligence hub in eLiSA that offers traders a unique operating lens and streamlined workflow.”

Elsewhere, Wave Labs has also made various connections to data sources with eLiSA providing an open data portal to traders and portfolio managers which can channel structured and unstructured data.

The dataset includes continuous estimated prices, IOIs (indications of interest), axes, TRACE data and credit research. Data partnerships have also been formed with Neptune, Bloomberg and upcoming data pooling network Glimpse Markets.

“Connectivity to buy-side clients’ core workflow tools, such as order or execution management system (OMS/EMS), is integral to Neptune’s strategy,” Byron Cooper-Fogarty, acting CEO of Neptune, commented on the firm’s partnership with Wave Labs. “As such we continue to work with partners such as Wave Labs to provide the highest quality fixed income data to mutual clients.”

More recently, Wave Labs expanded its partnership with IHS Markit forged a data agreement with thinkFolio to source fixed income data and price discovery. New York-based corporate bond analytics provider BondCliQ will also provide the eLiSA platform with real-time quotes from more than 45 dealers covering 15,000 CUSIPS for 120,000 price points each day.

“We look forward to building on the strong partnership between Wave Labs’ eLiSA system and thinkFolio by collaborating further across bond pricing and reference data to deliver additional insights around liquidity and price discovery,” Nathan Kirk, executive director of fixed income strategy for EMEA at IHS Markit, commented.

As liquidity continues to migrate from traditional liquidity providers to trading venues and all-to-all trading in fixed income continues to rise, Kumaresan added that both makers and takers of liquidity need better systems for efficient trading. The buy-side is also increasingly taking on the role of price maker, which eLiSA aims to cater for by allowing asset managers to make prices in bonds.

“Growth in all-to-all trading will give rise to formation of more complex fixed income market micro-structure for the first time, a relatively new concept in fixed income,” Kumaresan said. “Liquidity will still remain fragmented, however, it will become more uniformly divided among the different venues. This trend will pose new challenges to the buy side trading desk – how do you harness this form of larger pools of fragmentation?

“The buy side has to respond to these changes to stay competitive. The question is no longer whether to invest in new trading technology, but more which technologies would offer flexibility to adapt and stay ahead. Now more than ever before, this responsibility falls on the shoulders of heads of trading to have a technology vision for their desk and lead this technology transformation as thought leaders.”  

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The London Stock Exchange Group’s European electronic bond trading platform, MTS, and Tradition’s interest rate platform, Trad-X, have launched a data service for European asset swaps.

The data service allows users to produce the related asset swap risk by consolidating French, German, Italian and Spanish live and executable interdealer government bond data from MTS with real-time executable EUR interest rate swap (IRS) data from Trad-X.

“This innovative combination of executable prices across platforms will add transparency and be beneficial to our clients and to the market as a whole,” said Mohamed Braham, global head of trading for fixed income and currencies at Societe Generale corporate and investment banking.

The service is based on dealer-to-dealer prices from MTS’ electronic fixed income trading market in Europe and Trad-X’s network of major banks globally.

It offers multi or single country displays, as well as a set of indicative yield/yield and par/par asset swaps which are calculated against three- and six-month IRS maturities from two to 30 years. TraditionDATA will publish the resulting asset swaps built from the two regulated real-time order books.

“This collaboration with two flagship EU trading platforms in the form of MTS and Trad-X brings a valuable, logical and unique source of key data for many European customers,” said Scott Fitzpatrick, global head of TraditionDATA.

“Data is no longer just a by-product of trading; innovative data feeds and information have become the cornerstone to efficient execution and trading strategies.”  

European exchange operator Euronext is currently in the process of acquiring MTS from the London Stock Exchange Group (LSEG) as part of its €4.3 billion Borsa Italiana deal.

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LSEG said in a statement it has delivered the system as part of a collaboration with UBI Banca, and the bank has now gone live as a market maker on its MTS Cash platform, initially for Italian government securities.

“Working closely with LSEG Technology to develop this customised, high performing and resilient solution will enable us to expand the products and services we offer to our customers. The successful go-live of the new IT platform will support our business’ growth in market maker activities in the fixed income space,” said Massimiliano Baga, head of core and omnichannel services at UBI Banca.

The development and implementation of LSEG’s IT platform will also support UBI Banca’s expansion of products and services to its corporate and investment banking clients.

“We are delighted to have successfully implemented a new IT platform at UBI Banca to enable them to commence market making for Italian Government Securities through MTS Cash,” added Ann Neidenbach, global head of LSEG Technology. “The new platform offers UBI Banca a highly efficient, scalable solution to help drive connectivity to MTS Cash as well as other European debt markets.”

LSEG confirmed recently it is exploring the sale of its MTS fixed income trading business, or the wider Milan-based stock exchange Borsa Italiana, in a bid to alleviate concerns around its major acquisition of Refinitiv.

The exchange has commenced exploratory discussions to sell its interest in MTS or the Borsa Italiana group as a whole sold to a third party. LSEG added there is no certainty it will decide to proceed with a transaction for either businesses.

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In a statement, LSEG said it has commenced exploratory discussions which could see the exchange group’s interest in MTS or the Borsa Italiana group as a whole sold to a third party. LSEG added there is no certainty it will decide to proceed with a transaction for either businesses.

The decision to explore the sale MTS and Borsa Italiana follows news last month that the European Commission began a more in-depth investigation of the proposed $27 billion takeover due to concerns it could dampen competition in trading and clearing.

MTS was specifically named by the European Commission as it confirmed the in-depth investigation. The Commission said the combination of LSEG’s MTS platform and Refinitiv’s Tradeweb 54% interest will significantly increase their market share in electronic trading of European government bonds, in a move that could reduce competition and make it more difficult for new platforms to enter the space.

“We have opened an in-depth investigation to assess whether the proposed transaction which will combine the activities of LSEG and Refinitiv would negatively affect competition in these markets,” said executive vice-president at the European Commission, Margrethe Vestager, at the time. “It is key for a well-functioning financial market to ensure that market participants continue to have access to financial market infrastructure and financial data products on competitive terms.”

Shortly after, competition authorities’ in Singapore also raised concerns with the acquisition and advanced its probe into the deal amid concerns it could harm competition in index licensing. In March, LSEG said it had received approval from the Committee on Foreign Investment in the United States (CFIUS), which had concluded its review and found no concerns with the proposed deal.

Upon confirming plans to explore the sale of MTS or Borsa Italiana, LSEG added that the US Department of Justice has closed its antitrust investigation with no further concerns. The exchange said it continues to work with authorities on progressing the remaining approvals and clearances, and expects the acquisition to close by the end of this year or early in 2021.

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