Vuk Magdelinic

Speaking to The TRADE, Vuk Magdelinic, chief executive of Overbond, explained: “A lot of buy-side firms, depending on their portfolios of course, look to Neptune basically to discover price and size most efficiently. This service is augmented now with a systematic integration of Neptune real time data and an algorithm that can then do deeper comparison both in real time and historical, digesting more data and bringing the insights to buy-side desk faster and in a more robust way. It’s essentially a levelling up of the Neptune benefits.”

The move will enhance client-specific analytics for corporate trading execution as well as providing Neptune Networks, a fixed-income pre-trade market utility, with the latest in AI size-adjusted pricing and liquidity discovery.

Byron Cooper-Fogarty, chief operating officer at Neptune, said: “Neptune has always responded to buy-side demand for connectivity to core workflow and analytical tools. The integration with Overbond is the latest step in that process.” 

In addition, Overbond is also set to expand the securities covered by its analytics and trading algorithms through the incorporation of Neptune data into each single-tenant client environment, on request. 

While sell-side fixed income desks have distributed axes to clients to signal which securities they are most interested in buying and/or selling for some time, buy-siders instead use this information to execute large trades, optimise order allocation and source liquidity for less liquid securities. 

Read more: Bond traders increasingly managing execution rather than partaking

“This is at the end of the day data integration. Obviously, the Overbond product on its own already has capability to aggregate different data sources to produce recommendations on size, routing, and obviously liquidity profile and market price per security, but the Neptune data inclusion for buy-side shops makes the dealer quotes and execution component of that aggregation more robust and extends the coverage and precision and relevance of the signals for particular buy-side desks. It’s a client-specific solution.” Magdelinic said to The TRADE.

Following this integration, Overbond AI is set to utilise axe data provided by Neptune to enhance its size-adjusted pricing, with plans for this to be included in its analytics and trade automation suite.

Read more: Overbond unveils new artificial intelligence-based smart order routing system

Last September, Overbond unveiled its smart order routing (SOR) algorithm, aimed at addressing the time-consuming and challenging process of allocating trades via the best execution route.

Specifically, it uses historical information alongside current dealer axes, unique to clients, to determine the optimal dealer to engage for a specific security, given current market conditions. The live axe data from Neptune will further enhance the precision of the Overbond SOR algorithm, according to the business.

Speaking to future plans, Magdelinic told The TRADE: “I think with increased buy-side adoption we will look to deploy our next generation smarter order router, which helps buy-side desks with recommendation of where to route – not just amongst the dealer inventory choices, but also with regards to the venues and protocols they’re connected to.”

The post Overbond integrates dealer axe data with Neptune platform API appeared first on The TRADE.

The biggest evolutionary change in fixed income has been the reliance on data as part of the investment and trading decision making process. It’s not just a case of data being used on the trading desk anymore and I think Covid accelerated that. The connectivity that Neptune has achieved, driven by the buy-side demand, to be plugged into OMS, EMS, PMS, liquidity optimisers, signal generating systems, etc. is something that we couldn’t have foreseen seven years ago.

It means, in our area of expertise, axes are used from the smallest of trades, as part of the auto-ex decision making, to the very largest, where knowing who is a seller or buyer and limiting information leakage is vital for both sides of the market. Axes are no longer the preserve of the trading desk at asset managers. The use of this data by the portfolio management function means they can better represent their investment process by taking liquidity into account.

What still needs to change?

Dealers still need to get better at distributing their data and managing where it goes to. One of the restrictions on getting more insightful data from the sell-side to the buy-side is a concern around how to get the information there and what happens after that. Neptune has made a big impact on that in axes, however there are other areas, like runs, where we think a similar model may work. It means less reliance on the human aspect, but not total exclusion by any stretch of the imagination.

On a micro level, the dealers need to get better at making sure they’re sending the most accurate and best quality data. A lot of dealers are challenged by the amount of data they have to distribute. One of the key things is how do they get that out there in a systematic way that also feels safe? You get a lot of line traders who still send things out via email or spreadsheets because they feel that’s the safest way because they’re direct but there’s no controls around it. With regards to runs for example, a lot of dealers would admit that they’re not sure exactly where that information goes to and what happens on the back of it.

The way data is used in Europe and the UK is more advanced than in the US. At Neptune, some of our most advanced clients are in the states but in some cases the data hasn’t become the thing that it has in EMEA. I’m sure it’ll catch up in the same way that e-trading has. There is not a correlation to AUM. There are some very big funds that still operate in a fashion that more advanced firms in the US and here would consider out of date. The client dealer relationship in the US is not so data-driven because of the concentration around larger dealers in the US. There’s more fragmentation in Europe and the UK.

Is data cost something still worrying participants, how is this specific to fixed income?

All costs are a worry to fixed income participants. I’d suggest costs of electronic execution is a bigger concern than data, certainly for the sell-side, as it has a direct impact on a per trade bottom line basis. One of the main complaints we get from the sell- and buy-side is that data is a high margin basis and so it’s attractive for people to acquire as much data as they can and then sell it back.

Many entities follow the equities exchange model to generate that high margin business. Often this involves buying data where your data has formed a part of that information. For both the buy- and sell-side, there is more that can be done to ensure they receive value for their contribution to data sets.

Could a consolidated tape have any actual impact on fixed income trading?

Using TRACE in the US as the example, the consolidated tape will certainly have an impact on trading. The extent of that impact depends on where it settles, in terms of coverage and deferrals, and who the CTP is. I didn’t live through TRACE as I wasn’t in the US at the time but the feedback I got was that it was initially a big impact but it was more widespread in terms of what it captured. The CTP feels like it will be a softer launch than TRACE, in terms of the coverage and the deferrals so it is likely in the EU and UK to have less initial impact. It will have some impact undoubtedly but it depends on the extent to which it lands. In terms of axes, having post-trade data allows Neptune and our clients to better track the value of axe data and relationships.

How do you expect greater data access to impact traders’ future protocol selection?

Greater data access has already led to protocol evolution in e-trading. An area that was once dominated solely by RFQ now has significant flow in all-to-all and portfolio trading and data has driven much of this change. Without data, the buy-side can’t go in with confidence using these protocols. Likewise, the growth in algo pricing in credit, and the resulting expansion of algo axes, has been a strong area for Neptune in 2023.

One of the biggest growth trends we have seen has been in algos and algos are data hungry. An algo is going to be less sensitive to protocol types than a line trader may be. Up to a certain size if an algo gets hit with a request for market as opposed to a request for quote they’re going to much less sensitive than when there’s a human on the other side. Line traders are notoriously unwelcoming to request for market. Having said that, any new protocols, like new technology, has to have a value proposition. It can’t just be a different way to do what you can already do now. Sometimes people can get carried away with new things and lose sight of value add. It has to add something new. A lot of protocols don’t gain traction.

What is the next stage of innovation when it comes to axes?

Axes are what has driven Neptune’s success. It’s the most valuable pre-trade data you can get in the marketplace. Tiering is a big one for Neptune and ensuring the right information is going to the right clients, for the mutual benefit of the dealer and that buy-side entity. It isn’t a case of all information to all people, especially in credit or emerging markets. There are some trades in some sizes that you are just not going to trade electronically due to information leakage.

There are several projects in the pipeline primarily driven by the buy-side including matching axes directly to trading and also tagging axes less generically. By this we mean dealers letting select clients know more about the origin of the axes, in order to elicit a more meaningful engagement on the data. This can only enhance trust and the relationship between sell- and buy-side.

The post Fireside Friday with… Neptune Networks’ Byron Cooper-Forgarty appeared first on The TRADE.

Next up in our introduction to the distinguished nominees for the Leaders in Trading 2023 Editors’ Choice Awards, we bring you the shortlist for the Outstanding Market Data Provider category, shining a light on those displaying recent excellence in the data sphere.

Over the last year, the market has been increasingly turning its attention to data quality and accessibility, with providers continually enhancing their offerings for clients through technological developments, new partnerships and significant investment.

Among the key players in this competitive landscape, The TRADE has selected big xyt, BMLL Technologies, Neptune Networks, and TP ICAP, Parameta Solutions for the 2023 shortlist, following various individual achievements by these vendors over the past year. 

big xyt

Market data provider big xyt has had a stellar year. Among its recent moves was the unveiling of its real-time analytics offering in October in which it leverages its own proprietary European tape. The turnkey solution provides trading firms, exchanges, dealing desks and issuers with enhanced post-trade metrics, as well as pre-trade support. The ‘first-to-market’ service is focused on a high quality, consistent and normalised dataset of European trades and EBBO benchmark prices.

In July, big xyt and the Johannesburg Stock Exchange launched a joint venture, named big xyt ecosystems, to offer data analytics to global trading venues. It offers the Trade Explorer data platform, recently launched in South Africa, to financial centres globally, offering analytics tools which allow users to understand market liquidity and flows, market share, business concentration and execution performance, alongside delivering tools for analysing trading patterns and for pre-trade decision support. Prior to this, in May, big xyt launched a new trade verification tool – an extension of its Open TCA solution – to improve ETF execution, with the move having come in response to the pre-hedging debate. It is focused on execution analytics at both the pre- and post-trade stage, with users able to submit any trade or order for the analytics returning the verification of orderbook characteristics, price reversion and execution performance instantaneously.

With Europe as its key market, big xyt has also continued to expand globally, onboarding and upgrading a number of clients. Through these relationships, the business has worked hand in hand to offer some of its clients’ functionalities through its own product suite for use by other users. A key characteristic of the independent business is its autonomy – to date the provider has not received any external investment, maintaining its stance as an entity with zero change of conflict of interest. 

BMLL Technologies

BMLL has gone from strength to strength in recent months following its Series B Funding in October 2022, raising $26 million from Nasdaq Ventures, FactSet and IQ Capital’s Growth Fund. Following this, in September of this year, Snowflake Ventures joined the Series B investment round as BMLL entered into a partnership with Snowflake. The business provides its clients – banks, brokers, asset managers, hedge funds, global exchange groups, academic institutions and regulators – immediate and flexible access to Level 3, harmonised, T+1 historical order book data and advanced pre- and post-trade analytics at scale.

The provider has continued to expand through partnerships and launches, with Magma Capital Funds; Aquis Exchange; SIX Group; Jefferies; Berenberg; FactSet; Bank of England; Financial Conduct Authority; NYU’s Quant Team; and Kepler Cheuvreux as the latest additions to its client roster. In September, trading infrastructure provider Exegy entered into an introducer partnership with BMLL Technologies to help free up time spent on data analysis, allowing for algos to be enhanced and for clients to derive alpha. BMLL has continually stressed the importance of global coverage in today’s markets and recently added Aquis data for listed companies, data from FINRA US, Cboe Global Markets Japan and CBOE Australia, the Australian Stock Exchange, Japannext Co., SGX Group, the Johannesburg Stock Exchange (JSE), and Hong Kong Stock Exchange (XHKG), as well as expanding its equities and ETF data offering to include Shenzhen Stock Exchange data.

Through recent investments BMLL has been able to expand geographically, as well enhance its data coverage and grow the team. Over the last 12 months, the team has grown by 35% in areas including: engineering, technology, sales and marketing. Recent people moves include industry veteran Rob Laible appointed as head of Americas, Jenny Chen as head of sales, Americas, and Tom Jardine as customer-facing data scientist, Americas.

Neptune Networks

Neptune has made several strides and seen significant growth in the last 12 months, working to enhance liquidity in global markets. It provides axes from top global fixed income dealers to various buy-side firms, supplying the highest quality bond pre-trade data from the sell-side via FIX. Neptune data is delivered via several workflow options, including direct to OMS and/or EMS, or via a number of APIs, covering various asset classes, including: credit, emerging markets, rates and Munis. Its network provides data from 32 global dealers via one connection and in the last 12 months, the business has developed its buy-side client remit, with more than 90 firms live on the platform, managing over $60 trillion in global assets under management.

In June, Mizuho EMEA joined the Neptune network as axe dealer for bonds, set to distribute axes for investment grade and high yield corporate credit. The following month, fixed income axe provision platform, Neptune Networks, added Lloyds Bank Corporate & Institutional Banking to its bond dealer community. Following the addition, Lloyds Bank confirmed that it would distribute axes of GBP and EUR investment grade and high yield corporate credit as well as UK gilt through Neptune. Other recent additions include Santander and Lombard Odier. Through this move, Lombard Odier has access to Neptune’s axes across rates, investment grade, high yield and emerging markets bonds. 

TP ICAP, Parameta Solutions 

Parameta Solutions is TP ICAP’s data and analytics division and provides a range of services for the market: OTC market data, benchmarks and indices, risk solutions, and regulatory solutions. In the last year its data offering has developed through product launches and updates in different areas. As of August 2023, Parameta Solutions’ revenue had increased 5% to £91 million, with an overall uplift in margin and profitability. The firm provides users with pre- and post-trade analytics, as well as unbiased OTC content and proprietary data, price discovery insights, and risk management services. Its offering also includes benchmark and indices, and the business was recently recognised as an EU benchmark administrator by ESMA, becoming the first inter-dealer broker to administer OTC benchmarks and indices across both Europe and the UK. The post-trade offering helps users control their counterparty and regulatory risks. The tools manage balance-sheet exposure and also provide compression and optimisation services.

In August 2022, the firm joined forces with PeerNova to launch ClearConsensus, a transparent high-fidelity consensus network for independent price valuation (IPV). A year on, in August this year, TP ICAP, Parameta Solutions launched a new family of interest rate volatility (IRSV) indices in a bid to provide robust and transparent daily indices in interest rates swap markets. IRSV indices, built on a theoretical foundation when measuring interest rate swap volatility, allows for a model-free measure of spot implied volatility for market participants.

The business is focused on the consolidation of Parameta Solutions companies – which is well-progressed according to the business – in a bid to develop more partnerships with third-party data providers, with a confirmed investment planned for the expansion of the business. In addition, Parameta Solutions is working in conjunction with global analytics firm Numerix to build independent fair valuation of OTC derivatives – set to launch a new valuation product in H1 2024, adding to the risk management solutions.

The post Leaders in Trading 2023: Meet the nominees for… Outstanding Market Data Provider appeared first on The TRADE.

As part of the collaboration, Lombard Odier will have access to Neptune’s axes across rates, investment grade, high yield and emerging markets bonds.

Trading and advisory users worldwide will utilise the data for the benefit of their end investor client base.

Lombard Odier’s clients will have access to additional market insight and identification of investment opportunities from the Neptune axe data, which is delivered directly from 32 fixed income dealers globally.

Read more: Is the use of axes set to usurp the status quo in fixed income?

“We are delighted to have Lombard Odier join the Neptune buy-side community. Having such a prestigious firm involved with Neptune demonstrates the value we continue to provide to investors and will allow further market insight to Lombard Odier’s traders and advisors,” said Byron Cooper-Fogarty, chief operating officer at Neptune.  

The addition of Lombard Odier follows Lloyds Bank Corporate & Institutional Banking being added to Neptune’s bond dealer community last month.

Elsewhere, Mizuho EMEA joined Neptune as an axe dealer for bonds in June. 

“Lombard Odier has a long-standing commitment to innovation to meet ever-evolving customer needs,” said Stephen Grady, head of global market services at Lombard Odier.

“Access to real-time axe data from Neptune is one more example and allows us to deliver better trading outcomes for our clients around the world.”

The post Lombard Odier joins Neptune’s buy-side community appeared first on The TRADE.

Axes have typically been used by traders looking to execute larger or block trades which they are not comfortable executing electronically. In this instance, axes are able to provide traders with an indication of which sell-side counterparty they should select.

The use of axes has also seen continued use in the fixed income space, with their use cases expected to continue to increase in the future.

“The ability to find a matching opposing side remains crucial in the many, less liquid areas within fixed income,” Lars Salmon, head of fixed income trading EMEA at Fidelity International, told The TRADE.

“Whether it is direct provision of axes by dealers, through specialised vendors or those who play a broader role in markets, or axe indications on trading platforms – in a world where markets are fragmented, dealer balance sheets light, settlement discipline likely to find further focus from regulators – and all of that resulting in challenged liquidity – the likelihood of strong execution results generally improves where inventory can be utilised.”

Elsewhere, in the credit markets, axes are particularly useful given that traders are typically executing larger orders where minimising market impact and information leakage is essential.

Over the years, buy-side use of axes has evolved significantly, with portfolio managers increasingly using them as well. Portfolio managers typically use axes to be more opportunistic and to ensure that when looking to send an order to the execution desk, it is something that has a realistic chance of being executed in the first place.

“There’s not much point trying to sell a bond if there are no bids out there and vice versa,” Byron Cooper-Fogarty, chief operating officer at Neptune Networks, told The TRADE.

“The axes also allow portfolio managers and the trading side to interact in a way that that finds the optimal bond to express their investment views.”

The most important aspect of axes is the information they provide around a counterparty, Cooper-Fogarty highlights, emphasising that the direction is key. “It’s really the counterparty, the direction, the size, but also an indication of value – be that spread or price as well – which are the most important things axes can provide,” he added.

“Historic axe data has started to become more important as well. Increasingly, what we’ve found is our buy-side clients are measuring their counterparties from the sell-side in terms of slippage or price improvement. Based on the historic axes, they can get a picture of reliability around axe data as well for each counterparty.”

The use of axes has seen continued growth in both the US and in Europe, as they become a larger part of the trading and investment process. Axes are no longer only being used on the trading desk, but also research and by portfolio managers.

“In terms of provision of axe data, accuracy (of size and level) is having a number of advantages in terms of pre-trade considerations, though less specific indications can also work, arguably helping to protect the liquidity providers that remain pivotal in the fixed income market structure,” noted Salmon.

“While a number of ideas with regards to the evolution of fixed income markets are based on bringing as many interests/axes together as possible, it is questionable whether the market structure can change drastically enough in the foreseeable future to significantly reduce the very material reliance on the current crop of market makers – mostly banks and some non-bank liquidity providers – and the way the majority of business is still being conducted.”

The post Is the use of axes set to usurp the status quo in fixed income? appeared first on The TRADE.

Following the addition, Lloyds Bank will distribute axes of GBP and EUR investment grade and high yield corporate credit as well as UK gilt through Neptune.

Neptune Networks delivers axes from 32 dealers in global fixed income to more than 90 buy-side firms (managing $60 trillion in global assets under management).

“We are delighted to have Lloyds Bank join Neptune as the latest dealer to provide axes and inventory data to our buy-side community,” said Byron Cooper-Fogarty, chief operating officer at Neptune.

“This has been a client driven addition, as buy-side traders and portfolio managers continue to ask for high quality data from specialist liquidity providers such as Lloyds Bank.” 

The addition of Lloyds Bank follows that of Mizuho EMEA, which joined Neptune network as an axe dealer for bonds last month.  

“We are proud to play our role in making the market more efficient for all participants including our clients by sharing data and enhancing liquidity in UK markets,” said Boris Tadic, head of credit sales and trading at Lloyds Bank Corporate & Institutional Banking.  

The post Neptune adds Lloyds Bank Corporate & Institutional Banking to growing bond dealer community appeared first on The TRADE.

Following its addition, the bank will distribute axes for investment grade and high yield corporate credit.

Guy Cornelius, head of institutional sales at Mizuho EMEA highlighted that the move will work to make the market more efficient for all participants “by sharing data and enhancing liquidity in global markets.”

Neptune Networks disseminates real-time axe data, delivering axes from 32 dealers in global fixed income to more than 90 buy-side firms (managing $60 trillion in global assets under management) via FIX.

Through its offering, Neptune’s data can be delivered via a range of workflows, including: direct to order management systems, execution management systems or via API.

Byron Cooper-Fogarty, chief operating officer at Neptune, said: “We are delighted to have Mizuho join Neptune as the latest dealer to provide axes and inventory data to our buy-side community. This has been a client driven addition, as buy-side traders and portfolio managers continue to ask for high quality data from liquidity providers such as Mizuho.”

The post Mizuho EMEA joins Neptune network as axe dealer for bonds appeared first on The TRADE.

Axes on investment grade and high yield corporate credit, and emerging markets sovereign bonds will be distributed by Flow Traders via Neptune’s fixed income network for disseminating real-time axe data.

Neptune provides axes from 30 of the top global fixed income dealers to more than 80 buy-side firms managing $49.5 trillion in global assets under management (AUM).

The distribution will initially be focused on 5,000 ISINs in euro-denominated corporate credit and dollar-denominated emerging markets sovereign bonds.

“We are delighted to have Flow Traders join Neptune as the latest dealer to provide axes and inventory data to our buy-side community,” said John Robinson, chief executive of Neptune.

“This has been a client driven addition, as buy-side traders and portfolio managers continue to ask for high quality data from alternative liquidity providers such as Flow Traders.” 

Ramon Balje, head of fixed income EMEA at Flow Traders, said the corporate bond market continues to transform and innovate as a result of technology advancements and the availability of higher quality data,

“Flow Traders has been a longstanding supporter of this innovation and the transparency, cost reduction and efficiency gains it brings to the market,” he said. “Therefore, we are delighted to become a sell-side contributor on the Neptune platform and provide axes and inventory data to their growing network of counterparties.”  

Earlier this month, Flow Traders announced that it was to become the latest name-disclosed liquidity provider available on Live Markets, MarketAxess’ live order book.

Prior to this, Flow Traders serviced Live Markets anonymously for multiple years.

The market maker will now provide liquidity across US high yield corporate, euro-denominated investment grade and high yield, and emerging market sovereign bonds.

The post Neptune adds Flow Traders as dealer distributing real-time axe data to buy-side clients appeared first on The TRADE.

According to an update on social media, John Robinson has been appointed chief executive officer at Neptune after joining the firm’s senior management team in November last year, having most recently worked at Morgan Stanley for nearly 35 years.

At Morgan Stanley, Robinson served across several roles including global head of emerging markets sales, head of European credit sales, and head of US investment grade sales, among others, leaving the bank at the end of 2019.

He replaces interim chief executive officer, Byron Cooper-Fogarty, who took the helm in January last year following the planned departure of former chief executive officer Grant Wilson.

“We are delighted to announce that John Robinson has been appointed CEO at Neptune Networks. Joining the senior management team last November, he has now started his new position as CEO,” said Neptune in its social media update.

His appointment follows a series of other senior people moves at Neptune Networks as the data platform, originally founded in 2016, continues to gain momentum in the market.

Following a $15 million funding round from its existing major bank shareholders in June last year, Neptune has appointed Ashley Armanno, a former BGC broker, for a sell-side sales role focused on growing its US client base, and a former UBS digital transformation specialist, Gavin Collins, as its new chief technology officer.

The post Neptune selects former Morgan Stanley MD for next chief executive appeared first on The TRADE.

Fixed income data platform, Neptune Networks, has appointed an electronic markets specialist with nearly two decades of experience as its chief technology officer.

Gavin Collins joins Neptune Networks as technology chief after most recently serving as fixed income, currencies and commodities (FICC) product manager for sales technology, CRM and digital transformation at UBS for six years.

Prior to joining the Swiss investment bank, Collins was head of FX electronic product development at BNP Paribas for nearly two years and as electronic markets product manager at Deutsche Bank for three years. 

Previously in his career he also served in various electronic markets roles across asset classes at Citi and NatWest. 

“I’m thrilled to start as CTO at Neptune Networks Ltd. to help our clients find the largest and most reliable bond pricing data in the market said Collins in an update on social media. “I’m hugely grateful to everyone at UBS for all the learning and fun in digital transformation and excited to see where you go!”

His appointment follows a series of senior moves at the bond axe specialist after it appointed former broker from BGC Partners, Ashley Armanno, to expand its US sell-side client base in February and appointed its head of sales, Byron Cooper-Fogarty, as interim chief executive in January. 

The fixed income data platform also raised $15 million in a funding round last year from existing investors Bank of America, Barclays, BNP Paribas, Citi, Credit Suisse, Deutsche Bank, Morgan Stanley, UBS, Goldman Sachs, JP Morgan aimed at expanding its US coverage.

The post UBS digital transformation exec joins Neptune as technology chief  appeared first on The TRADE.