Quantifi Survey Reveals Trend Towards Machine Learning in Fixed Income

Participants from across the industry were surveyed on the changes occurring in the fixed income market.
26 May, 2022

Quantifi, a provider of risk, analytics and trading solutions, recently hosted a webinar featuring Celent, a research and advisory firm, on the ‘Evolution of the Fixed Income Landscape’. As part of the webinar, delegates from across the industry were surveyed on the changes occurring in the fixed income market.

The fixed income market is experiencing a wave of increased automation. In turn, the tides of technology have reconfigured the operating landscape. In the last few years, COVID-19 has accelerated the demand for increased efficiency as working practices on trading desks call for greater flexibility. Cloud technology is also providing the foundation for expansion in fixed income markets by helping to facilitate the consumption of data and integrating new cloud-deployed applications. Not surprisingly, a firm’s success has been tied to how well prepared they are to respond and participate in the wake of these changes. 

Key findings from the survey:

  • Despite the financial risks and costs, all participants considered market making for sovereign debt to be a valuable activity.  56% of responders see the potential to leverage their activity or expertise to conduct other profitable activities while the other 44% see market making a requirement to maintain or enhance its firm’s brand.
  • With the fixed income market moving towards automation and with new technology reconfiguring the operating landscape, 64% of respondents believe in 5 years’ time more than 50% of bond trading will be handled by AI and machine learning enabled systematic market makers.
  • Against the backdrop of automation, firms are also having to contend with regulatory change. The transition from LIBOR to SOFR will have a huge impact across the spectrum of fixed income. Most respondents (41%) believe that the “SOFR-in-advance” rate rather than the CME SOFR Term rate (25%) will be the prevailing rate in two years’ time.

Quantifi provides the most comprehensive fixed income product coverage in the market. Its best-in-class pricing library is trusted by tier-1 banks and leading investment managers. As the market leader in Fixed Income and Credit, Quantifi has gained significant traction in recent years from firms looking to tackle challenges around analytics, portfolio optimization, risk management and operational efficiency by automation of business processes.

“Fast, accurate analytics is a prerequisite for any automated bond trading or market-making platform. In order to phase out outdated and inflexible infrastructure, buy- and sell-side firms are turning to fintech firms, like Quantifi, that specialise in providing sophisticated model libraries and pricing frameworks built on new technology,” comments Alexei Tchernitser, Director, Analytics Solutions, Quantifi.

For the full survey report visit: https://www.quantifisolutions.com/survey-evolution-of-the-fixed-income-landscape/

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