Broadridge’s LTX launches RFQ+ protocol to facilitate large trade sizes in bond markets
“Executing size in today’s credit markets is often challenging.”
Broadridge’s bond market subsidiary LTX has launched RFQ+, a patent-pending enhanced RFQ protocol that combines pre-trade dealer selection analytics with liquidity aggregation capabilities.
RFQ+ was designed to better facilitate large trade sizes and reduce information leakage by aggregating multiple dealer responses for their desired amounts.
RFQ+ combines AI-powered pre-trade Dealer Selection Scores with novel liquidity aggregation
The enhanced RFQ protocol and the recent launch of BondGPT powered by OpenAI GPT-4 are two examples of AI-enabled workflows developed by LTX as the firm continues to drive innovation in the space.
Steve Chylinski, Head of FI Trading at Eagle Asset Management, said: “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+, the innovative aggregation capabilities and AI powered Dealer Selection Scores can potentially be a game changer for the buy-side and dealers to execute larger trades electronically.”
Jim Kwiatkowski, CEO of LTX, commented: “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.”
Electronic execution methods currently available do not accommodate larger trades sizes, which continue to be traded bilaterally, Broadridge’s LTX argued.
Nearly half of mid-market credit asset managers say they never use e-trading for orders between $5-10M and 64% say they never use e-trading for orders over $10M, according to a 2023 survey from The DESK, which added that the most difficult execution objectives were size for 40% of participants, while 23% said both size and price.
Dealer Selection Scores allow a buy-side client to optimize the number of dealers to whom the client sends each RFQ, based on dealers’ real-time and historical LTX Liquidity Cloud inputs as well as pricing and platform behavior. Dealer Selection Scores also benefit dealers, allowing them to enhance direct networking to their clients.
After an RFQ+ is sent to an optimal group of dealers, multiple dealer responders can bid/offer for the size they each want. Patent-pending technology aggregates the bids/offers, allowing the buy-side client to fulfill the block in one session with multiple dealers.