The Future of Fixed Income Trading is Intelligent Automation

MarketAxess is on a mission to optimize trading workflows and technology resources by enhancing and expanding our Auto-X™ suite of automation protocols. The efficacy of our classic Auto-X RFQ (launched in 2018) is evidenced by the impressive growth in auto-executed trade volume, surpassing 1 trillion in trade volume earlier this year. We’re also seeing more firms and traders adopting our automation protocols, with many clients regularly turning to Auto-X RFQ for over 90% of their trading volumes. Traders who adopt rules-based approaches early on are primed to reap the benefits of our innovative automation workflow solutions and help craft the product around the largest opportunity sets. Our goal is to continue simplifying workflows for traders that give them a leg up on the competition as market structures continue to evolve.

The latest addition to help streamline trading workflows is Adaptive Auto-X, a Smart Order Routing (SOR) system that interacts with natural liquidity and market shifts to help clients implement their trading strategies across an array of protocols. Adaptive Auto-X acts as the central nervous system for trading strategies, with our protocols, data sources, and liquidity pools that facilitate trading acting as the nerve-endings. Just as the brain coordinates the body's functions, Adaptive Auto-X implements a trader’s order instructions alongside supportive streaming pricing data, frontier trading signals, and calibrated risk-based metrics to assist in determining the optimal trading strategy for a given client objective.

In the same way the nervous system responds to external stimuli, Adaptive Auto-X dynamically adjusts to handle the volatility and evolving conditions in the fixed income market – this includes pausing or removing trades from the market until markets stabilize. It leverages a variety of execution algorithm types, some focused-on liquidity seeking, others emphasizing execution certainty, or even passive strategies focused on trading with natural, contra counterparties.

Adaptive Auto-X enables traders to work their own orders across multiple protocols simultaneously, without having to manually intervene across individual protocols. For example, the ability to automatically participate in our Live Markets order book protocol though Multi-Party Workup (MPW) and LMM Live Markets Match (LMM) sessions without any additional trader effort. Adaptive Auto-X will leverage our Auto-X RFQ protocol when necessary, and will also post in Live Markets when eligible, or engage in a MPW session and send back signals for any attempts where a fill is not reached. This allows the tool to facilitate seamless execution by capitalizing on available liquidity to secure the best possible outcomes for clients while also reducing opportunity costs.

As Adaptive Auto-X continues to evolve, drawing on the depth of both proprietary and public trading data it accumulates, MarketAxess will continue to expand its algo offerings to meet the needs of our clients and support their best execution strategies.
 

For more information, contact Andrew Cameron at info@marketaxessfinance.com