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[ F I N A L T H O U G H T S | H AY L E Y M C D O W E L L ] Hayley’s Comment *Formerly the Hayley Mail Dutch courage The Fixed Income Leaders Summit in the beautiful city of Amsterdam this year played host to some fiery debates among the buy-side. N ow by no means is my headline of ‘Dutch courage’ suggesting anyone was under the influence of any alcoholic beverag- es during their panels, more that the canal-heavy location seemed to bring out the confrontational side of participants. Having long-been a topic of debate amongst fixed income market par- ticipants, it would appear the argu- ment about a decline in bond liquid- ity continues to rage. Regulators worldwide have rejected claims, up until quite recently, that liquidity in fixed income has deteriorated since the financial crisis in 2008. Lee Sanders, head of fixed in- come trading at AXA Investment Management, however, told dele- gates he has no problem sourcing liquidity and the use of tools like the MarketAxess OpenTrading platform has made the task easier. He went so far as to say the buy- side have in fact become lazy when 82 TheTrade Winter 2017 it comes to seeking out liquidity. Jim Switzer, global head of credit trading at Alliance Bernstein, countered this and claimed dealer balance sheets and a shift towards passive investing have led to an ex- acerbation of liquidity. “I disagree that liquidity today is the best it has ever been, it’s ok, but step back and look at the market before the financial crisis in 2008. If liquidity is fine, then why aren’t bid offer spreads higher? We have to keep talking about liquidity in bond markets,” Switzer said. Data was another hot topic at the Fixed Income Leaders Summit this year. Panellists raised questions about whether the buy-side will be well equipped to have an edge over large banks to become key players in fixed income markets. Global head of fixed income trading at Pictet Asset Management, Carl James, also endorsed the hiring of data scientists to sit alongside traders on the desk. He told dele- gates the Pictet team recently hired two data scientists with no trading background to make use of the ever-mounting data that asset man- agers have seen over recent years. MiFID II of course, did not fail to get a mention at the conference. Rather than debating the require- ments of the new regulation, senior market participants looked at the costs. They agreed complying with new legislation has created a less competitive environment for asset managers and it has led to the rise of the ‘defensive merger’. We’ve seen rather recently the creation of powerhouses boasting billions of assets under management. Stacked against these firms are the smaller asset managers who, panellists agreed, will need to look for more creative ways to fight off growing costs often seen through compli- ance technology and a squeeze on profits.