NEWS UPDATE
TRADING VENUES
ICE outlines RFQ expansion
President at ICE, Benjamin Jackson, says that following the acquisitions of
BondPoint and TMC Bonds, ICE will expand its request for quote services.
I
ntercontinental Exchange (ICE) has outlined plans
to integrate more request for quote (RFQ) functional-
ity onto its all-to-all execution platform, as the trading
venue continues its drive in the fixed income space.
Benjamin Jackson, president at ICE, told investors on
the exchange’s quarterly earnings call that as the fixed
income industry has become more comfortable with
electronic trading, ICE will integrate the RFQ protocol to
offer clients more choice of execution.
“While the underlying technology needs are relatively
simple compared to our streaming price liquidity tools,
RFQ is helpful for larger trade sizes and highly illiquid
instruments,” Jackson said.
“We are working to enhance our existing RFQ capabili-
ties, which already represent close to 20% of our volume
and handle more than 10,000 requests per day. We will
integrate this enhanced RFQ functionality into our robust
all-to-all execution platform, which logged over 800,000
trades in the third quarter of 2018.”
ICE has made efforts to expand its services in fixed
income with two major acquisitions in the space. The
exchange acquired KCG’s BondPoint from Virtu Financial
last year, and then TMC Bonds in July to bolster its fixed
income business. Both TMC Bonds and BondPoint have
had established RFQ mechanisms on their respective
platforms, but both are primarily streaming services that
provide the ability to handle, in BondPoint’s case, up to
100 million price updates per day.
“That’s substantial,” Jackson added. “You’re dealing
with streaming prices, where on BondPoint, it’s 10,000
securities. If you go onto their screen, you can execute
a single trade of 250 bonds on both sides. We wanted
to continue to provide that choice where the market so
chooses.”
A recent trend seen in Europe has been the rise of
RFQ functionality for equities trading. The London
Stock Exchange Group and Tradeweb, in partnership
with Plato Partnership, have outlined plans to provide
equities traders with the ability to trade using RFQ. As
equities is typically considered to be liquid, the buy-side
has expressed scepticism around the idea, also detailing
concerns around information leakage.
During the second quarter earnings call earlier this year,
Jackson detailed that after engaging with fixed income
traders and asset managers, ICE expects the automation
of fixed income trading from voice to request-for-quote
(RFQ) protocols to continue, particularly for larger-sized
trades.
“The phone is no longer an option for the high volume,
smaller trade size, as a result of fixed income market
structure changes that have fragmented inventory. So, the
efficiency in executions that [BondPoint and TMC] provide
is being embraced by the buy-side, the sell-side, corpora-
tions, and wealth advisors,” Jackson said at the time.
For an in-depth review of RFQ for equities, turn to
page 58.
12 // TheTrade // Winter 2018