Financial service software provider Iress, has entered into a strategic partnership with Fixed Income specialist Ediphy, to deliver a comprehensive fixed income trading solution to its global network. The collaboration will provide Iress trading customers with access to a low-cost trading mechanism and the ability to source extensive liquidity from fixed income providers and venues across the USA, Europe, and the Asia-Pacific region.
By way of background, Ediphy offers expertise in fixed income execution, workflow automation, and large-scale data management and analytics. The company provides automated execution services for a range of instruments, including government, sovereign, supranational, and agency bonds, credit bonds, and cleared interest rate swaps, with aggregated liquidity covering over 250,000 ISINs.
Iress provides software and services used by more than 10,000 businesses and 500,000 users globally, including trading & market data, investment management and data intelligence. According to the company, their customers are increasingly demanding the ability to trade fixed income instruments, with up to 20% of their order flows being aligned to fixed income as an asset class. The partnership with Ediphy further extends Iress’s ability to provide access to additional fixed income liquidity sources globally, without the need to onboard individual venues and liquidity providers.
Following the announcement, TradingTech Insight took the opportunity to speak with Ediphy’s CEO, Christopher Murphy, and Iress’s CEO, Global Trading and Market Data, Jason Hoang, to learn more about the partnership.
TTI: What was the strategic rationale behind the partnership, and what strengths do each of you bring to the other, particularly in terms of liquidity access and automation?
CM: Essentially, Ediphy integrates with multiple fixed income execution venues, helping clients streamline their trading workflow. Iress has a large global network, primarily supporting clients with their equity trading workflow. The strategic fit for us is strong because many of Iress’s clients currently trade fixed income largely outside their network. If we can help these clients trade fixed income in the same way they trade equities—by sending the order through the Iress platform—there will be benefits for Ediphy, benefits for Iress, and, most importantly, benefits for the client.
JH: The partnership with Ediphy enhances our clients’ access to aggregated liquidity across fixed income instruments globally. The Ediphy offering provides a low-cost mechanism coupled with an automated execution model to trade fixed income instruments across APAC, Europe and the US. Our clients only have to onboard with Ediphy to obtain access to liquidity through an extensive network of liquidity providers. We remain open to further automating this workflow to enhance the client user experience between our applications.
Iress remains agnostic and partnerships with the right service providers and vendors are a big part of our strategy in the short to medium term.
TTI: Jason, can you elaborate on the trends you’re observing in the demand for fixed income trading among your clients? What are the key drivers behind their increasing interest, particularly in the current global economic environment?
JH: Higher interest rates and a number of macroeconomic factors have forced Discretionary Fund Managers and Wealth Managers to invest outside of equities to provide more balanced portfolios and mitigate risk. This in turn has driven demand in fixed income as an asset class across our client base. This diversification can also be seen across our retail customer base, where retail investors are looking for more than access to liquidity in single stock equities.
TTI: Given that Ediphy’s offerings cover a broad range of fixed income markets, and given the wide range of trading protocols for fixed income compared to equities, how do you both anticipate this partnership will impact your clients’ trading strategies?
JH: Ediphy provides access to circa 250,000 fixed income instruments globally. This partnership won’t necessarily change our clients’ trading strategies, but it provides further optionality should they wish to. This partnership broadens the breadth and depth of coverage of fixed income products available to our client base.
CM: People often talk about the ‘equitisation’ of fixed income, but it won’t look exactly like equities because the fixed income market has its own unique challenges. However, there’s a reason equities have evolved in the way they have; clients ideally want to send an order down the pipe and have it executed seamlessly. That’s what we’re delivering for fixed income.
We abstract all the different protocols, so the order comes to us, and where we can automate, we do. However, where a heavier human touch is required, we have people on our side ready to step in. Our aim is to marry man and machine; we leverage technology where it can do a better job, but when human intervention is needed, we have fully FCA-authorised personnel to handle it. We have integrations with RFQ platforms, where our involvement is almost zero-touch, but when we need to engage in an IB chat, for example, we have the capability to do so. We take that burden away from our clients to provide them with a streamlined process.
TTI: Jason, with the rapidly evolving landscape of fixed income trading and market structure changes, how is Iress planning to stay ahead in providing innovative solutions to its clients? Are there any future developments or enhancements in your trading platform that we can expect following this partnership with Ediphy?
JH: As a firm we have recognised that to stay at the forefront of an ever-evolving market landscape, sometimes you have to partner with firms that are better positioned than yourselves to meet regulatory and market demands in certain fields. Ediphy are at the forefront of this fixed income evolution and are very much a trusted partner to potentially help our clients overcome their challenges by further automating and making complex workflows lower touch.
We constantly review how we can enhance the user experience and improve efficiencies in our trading and market data offerings.
TTI: Chris, how do you see things evolving from here?
CM: We see a convergence within this market, particularly with interest rates where they are, where there’s an increase in retail-type demand for fixed income products. The question is, how can we democratise access to help wealth management clients, for example, gain more streamlined entry to the bond market? We’re very excited about this as part of a broader paradigm shift.
TTI: Thank you both.
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