Managing Connectivity in a Fragmented Fixed Income Market
Driven by regulation and a need to demonstrate best execution, Fixed Income trading continues to evolve, becoming increasingly electronic. Whilst this benefits the market in terms of increased access and market transparency, it has also resulted in the industry-wide problem of fragmentation.
Currently Bonds, Futures, Swaps and Repos trade on more than 150 different execution venues globally - with approximately 230 different APIs. Add to this the launch of new venues that invariably offer something different and (maybe) better, and the problem of fragmentation looks like it is here to stay.
But this is not the end of the story. Connecting to a trading venue takes on average 3-6 months, but then there is also the not insignificant task of managing API updates – to support new fields, new protocols, new workflows, new security…..the list goes on.
We spoke with TransFICC about its solution, One API for eTrading, which translates all the 230 Execution Venue API’s to its own single API. Clients connect once to TransFICC, saving thousands of hours of coding, testing and managing upgrades.
"There are around 30 e-trading venues that most financial institutions want to be connected to. We are connecting our One API to these core venues first,” said Steve Toland, Founder of TransFICC. “API translation is what we do, but equally important is for us to support fast, secure and scalable technology, so that institutions can keep pace with price updates and not get beaten by high frequency trading firms."
TransFICC received initial seed funding in October 2017 from venture capital firm Illuminate Financial and main incubator (the R&D Unit of Commerzbank), with a third investment from Citi in August 2018.