Electronic trading evolution
19 April 2023
LTX CEO Jim Kwiatkowski talks to Lucy Carter about the evolution of electronic trading and LTX’s relationship with Broadridge
Image: LTX
A subsidiary of Broadridge, LTX provides an electronic corporate bond trading platform that offers increased liquidity to buy- and sell-side market participants.
Using a request for x (RFx) solution in place of the more traditional request for quotation (RFQ), the e-trading platform gives clients the option of one-to-many execution, full price development transparency and the ability to bid for preferred amounts.
Jim Kwiatkowski was appointed CEO of LTX in December 2022, after joining the company a year earlier as chief revenue officer. He has held various senior positions within the electronic trading industry, an area that he has seen develop over the course of his more than 30-year career.
Quick change
“Many years ago, electronic trading meant seeing some prices on a screen and picking up the telephone,” he recalls. Although some asset classes continue to use this fairly basic system, others have moved on to be “as simple as point and click” or use automatic execution based on what trades are available. “Innovations in the last 10 years that have made the price discovery, price transparency and selection of best counterparty electronic have been really interesting,” he says.
In the past five years, Kwiatkowski believes, the most significant development has been the evolution of data science. From the main complaint about data being its scarcity, firms are now finding themselves overwhelmed by the amount of information that they receive on a regular basis. “People don’t want data, they want the insights from the data,” Kwiatkowski explains.
LTX allows customers to consume a lot of data by providing them with relevant insights, helping them to improve their efficiency and get the information that they need — and information they didn’t know they needed. “Sometimes machine learning can help you find an insight that you weren’t even looking for,” he remarks.
Keeping it going
Kwiatkowski is determined to continue LTX’s expansion over the course of 2023, with 2022’s growth already continuing its upward trajectory as onboarding continued through January.
“We’re going to continue to build out the customer base on both the dealer side and the buy-side,” he enthuses.
While the company is receiving positive feedback from customers, it is taking user experience into account to further develop its services.
This information is gathered from informal meetings, Salesforce client services and product management reports and the recently formed advisory board.
“That’s become a really useful forum,” Kwiatkowski says. An agenda-driven methodology helps the company to target specific areas of improvement, with this more structured approach complementing the continual feedback from client conversations.
Finding solutions
One of LTX’s main selling points is its use of RFx, which is designed to solve two major problems of e-trading.
The method offers increased price transparency, allowing for participants to make more informed decisions, and uses a ‘one-to-many’ execution structure which simplifies the trading process.
“Typical trade sizes are quite small compared to what customers would like,” Kwiatkowski explains, with trades measured in hundreds of thousands rather than the millions that the buy side wants to execute.
One order must be matched with multiple participants on the other side of the trade for clients to achieve what they set out to do.
Additionally, there is little to no price transparency for both sides of the trade. “There’s no opportunity for someone to say, ‘if I’d known I was going to lose, I would have bid more’,” he states, and those on the sell-side are just as unaware of where competitors might be setting their rates.
For institutional investors wondering where to start with LTX, “participation begins in the liquidity cloud,” Kwiatkowski says. The platform’s main goal is to provide liquidity for customers, who become sources of liquidity themselves.
“Identifying those bonds that they might be sellers of, and identifying those bonds that they might be buyers of, becomes a source of liquidity for someone else that is a buyer or a seller,” he explains.
Being a part of Broadridge is certainly a boon for LTX, the company’s backing giving them a greater market presence. “Broadridge is a very trusted partner of the fixed income community,” Kwiatkowski reports — and trust is essential when clients are handing over lists of the bonds they wish to buy and sell.
Confronting crises
Although LTX is looking to the future, it is impossible to ignore the impact that 2022 and all the crises that came with it has had on the market. “Liquidity access worsened,” Kwiatkowski comments, going on to predict that this downward trend “may continue as a direct result of interest rates.”
Dealers, that hold inventories and connect buyers and sellers, often have to deal with delays.
Someone may want to buy on a Monday, but the seller may not want to sell until a later date, sometimes weeks or months after the fact.
With interest rates getting higher, the cost of holding the inventory is rising in tandem. “The availability of that balance sheet to facilitate that trade has declined,” and will only continue to do so as authorities hike up interest, Kwiatkowski predicts.
The solution to this is to identify liquidity on the sell-side of the trade earlier and through different means, Kwiatkowski argues.
This is where LTX’s liquidity cloud steps in: “Our clients are saying, ‘here are the things I’m interested in buying, here are the things I’m interested in selling’. We collect that anonymously from all of our clients, and we’re able to match buyers and sellers.”
After seeing impressive growth and continually increased demand for its services, LTX is set for a strong year ahead.
Taking in and responding to client feedback will doubtless improve the company’s offerings, and under Jim Kwiatkowski’s leadership, it would appear LTX’s success will not be stopping anytime soon.
Using a request for x (RFx) solution in place of the more traditional request for quotation (RFQ), the e-trading platform gives clients the option of one-to-many execution, full price development transparency and the ability to bid for preferred amounts.
Jim Kwiatkowski was appointed CEO of LTX in December 2022, after joining the company a year earlier as chief revenue officer. He has held various senior positions within the electronic trading industry, an area that he has seen develop over the course of his more than 30-year career.
Quick change
“Many years ago, electronic trading meant seeing some prices on a screen and picking up the telephone,” he recalls. Although some asset classes continue to use this fairly basic system, others have moved on to be “as simple as point and click” or use automatic execution based on what trades are available. “Innovations in the last 10 years that have made the price discovery, price transparency and selection of best counterparty electronic have been really interesting,” he says.
In the past five years, Kwiatkowski believes, the most significant development has been the evolution of data science. From the main complaint about data being its scarcity, firms are now finding themselves overwhelmed by the amount of information that they receive on a regular basis. “People don’t want data, they want the insights from the data,” Kwiatkowski explains.
LTX allows customers to consume a lot of data by providing them with relevant insights, helping them to improve their efficiency and get the information that they need — and information they didn’t know they needed. “Sometimes machine learning can help you find an insight that you weren’t even looking for,” he remarks.
Keeping it going
Kwiatkowski is determined to continue LTX’s expansion over the course of 2023, with 2022’s growth already continuing its upward trajectory as onboarding continued through January.
“We’re going to continue to build out the customer base on both the dealer side and the buy-side,” he enthuses.
While the company is receiving positive feedback from customers, it is taking user experience into account to further develop its services.
This information is gathered from informal meetings, Salesforce client services and product management reports and the recently formed advisory board.
“That’s become a really useful forum,” Kwiatkowski says. An agenda-driven methodology helps the company to target specific areas of improvement, with this more structured approach complementing the continual feedback from client conversations.
Finding solutions
One of LTX’s main selling points is its use of RFx, which is designed to solve two major problems of e-trading.
The method offers increased price transparency, allowing for participants to make more informed decisions, and uses a ‘one-to-many’ execution structure which simplifies the trading process.
“Typical trade sizes are quite small compared to what customers would like,” Kwiatkowski explains, with trades measured in hundreds of thousands rather than the millions that the buy side wants to execute.
One order must be matched with multiple participants on the other side of the trade for clients to achieve what they set out to do.
Additionally, there is little to no price transparency for both sides of the trade. “There’s no opportunity for someone to say, ‘if I’d known I was going to lose, I would have bid more’,” he states, and those on the sell-side are just as unaware of where competitors might be setting their rates.
For institutional investors wondering where to start with LTX, “participation begins in the liquidity cloud,” Kwiatkowski says. The platform’s main goal is to provide liquidity for customers, who become sources of liquidity themselves.
“Identifying those bonds that they might be sellers of, and identifying those bonds that they might be buyers of, becomes a source of liquidity for someone else that is a buyer or a seller,” he explains.
Being a part of Broadridge is certainly a boon for LTX, the company’s backing giving them a greater market presence. “Broadridge is a very trusted partner of the fixed income community,” Kwiatkowski reports — and trust is essential when clients are handing over lists of the bonds they wish to buy and sell.
Confronting crises
Although LTX is looking to the future, it is impossible to ignore the impact that 2022 and all the crises that came with it has had on the market. “Liquidity access worsened,” Kwiatkowski comments, going on to predict that this downward trend “may continue as a direct result of interest rates.”
Dealers, that hold inventories and connect buyers and sellers, often have to deal with delays.
Someone may want to buy on a Monday, but the seller may not want to sell until a later date, sometimes weeks or months after the fact.
With interest rates getting higher, the cost of holding the inventory is rising in tandem. “The availability of that balance sheet to facilitate that trade has declined,” and will only continue to do so as authorities hike up interest, Kwiatkowski predicts.
The solution to this is to identify liquidity on the sell-side of the trade earlier and through different means, Kwiatkowski argues.
This is where LTX’s liquidity cloud steps in: “Our clients are saying, ‘here are the things I’m interested in buying, here are the things I’m interested in selling’. We collect that anonymously from all of our clients, and we’re able to match buyers and sellers.”
After seeing impressive growth and continually increased demand for its services, LTX is set for a strong year ahead.
Taking in and responding to client feedback will doubtless improve the company’s offerings, and under Jim Kwiatkowski’s leadership, it would appear LTX’s success will not be stopping anytime soon.
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