Broadridge’s LTX has launched RFQ+, an enhanced request for quote (RFQ) protocol that combines pre-trade dealer selection analytics and liquidity aggregation capabilities. It also complements the firm’s existing RFQ and request for X (RFX) workflows.
The product has been developed in response to limitations around electronic execution methods, which tend to be unable to accommodate larger trades.
Recent research from The DESK, found that approximately half of mid-market credit asset managers never use e-trading for orders between US $5-10 million, with 64 per cent never using it for orders over $10 million. This is due to size and price issues around execution, participants said.
LTX’s new offering aggregates multiple dealer responses for their desired amounts, facilitating larger trades. The LTX Liquidity Cloud provides dealers’ real-time and historical liquidity inputs, alongside pricing and platform behaviour data, allowing buy-side clients to choose the number of dealers they send an RFQ to. These dealer selection scores also allow dealers to directly network to their clients.
Once an RFQ+ is sent, dealer responders can bid or offer for the size they want. These are then aggregated by the protocol, and buy-side clients can fulfil a block in a single session with multiple dealers.
The launch follows LTX’s recent launch of BondGPT, a workflow-simplifying service powered by OpenAI GPT-4.
Commenting on RFQ+, Jim Kwiatkowski, CEO of LTX, says: “RFQ+ combines AI-powered pre-trade dealer selection scores with novel liquidity aggregation functionality to solve genuine client pain points and further electronify the segment of the market that is still being traded bilaterally.
“This is the most recent example of LTX using emerging technologies to drive efficiency in the corporate bond market, to the benefit of dealers and the buy-side.”
Steve Chylinski, head of fixed income trading at Eagle Asset Management, adds: “Executing size in today’s credit markets is often challenging. The approach that LTX is taking to build on the familiar RFQ protocol with RFQ+ could potentially be a game changer for the buy-side and dealers to execute larger trades electronically.”
