13 October 2023
The fixed income trading community travelled to Barcelona for the European Fixed Income Leaders Summit (FILS) at the start of October.
Flow Traders acted as lead sponsor for the three-day event and during a keynote and panel, Ramon Baljé, Head of Fixed Income EMEA, Jasper Jansen, Head of Fixed Income Trading and Hassan Qureshi, EM Trader, shared their insights on the changing dynamics of the market and how the buy-side should consider evolved trading styles.
Here are some key takeaways that resonated well with the attendees:
Effect of Exchange-Traded Funds (ETFs) on Liquidity
The dialogues underscored the significance of ETFs in bolstering liquidity within fixed income markets. Ramon illustrated the surge in smaller ticket sizes around €1 million in the European Investment Grade (IG), a shift attributable to the growing ETF ecosystem. Overall, it was recognized that ETFs are a substantial driver of new liquidity in fixed income markets, as substantiated by a 2020 ICMA study.
Algorithmic Trading
The expectation surrounding the rise of algorithmic trading in the European IG market was apparent, it was predicted that nearly 50% of trading volumes are trading through an algo. Odin Costa from Dimensional Fund Advisors, part of the Flow Traders’ keynote emphasized how this evolution, coupled with electronic market makers, like Flow Traders, have catalyzed a greater electronification of bond markets as well as enriching liquidity.
Innovation
The discussions also steered towards innovation in fixed income trading markets. The combination of ETFs and algorithmic trading is perceived as a driver for increased innovation within the trading infrastructure and apparent when engaging with trading platforms such as MarketAxess, Tradeweb and Bloomberg.
Dan Barnes from The Desk covered Flow Traders’ keynote and shared the insights in his recently published article: FILS in Barcelona: How ETF evolution is a key prop for liquidity, read here.
Conclusion
The summit underscored the industry's collective effort to harness emerging technologies for enhanced liquidity and market efficiency. From the impactful role of ETFs to the potential of algorithmic trading, the summit captured the progressive trajectory of the fixed income market moving forward.