Thursday, August 9, 2012

credit e-trading - basics

2 "external" venues --
$ (ECN) interdealer electronic brokers -- Bloomberg, Marketaxess, TradeWeb, BondDesk, NYSE, TMC. These are like the exchange-connectivity interface.
$ Retail-facing Distributors - Fidelity, Charles Schwab etc. These are often the retail-oriented portfolio/wealth managers. These portfolio managers are like the "client connectivity" interface.
* Each external connectivity above can have a customized FIX protocol.

Volume -- 300 trades/day, 1000 RFQ(client inquiries)/day, but 4000 price updates/SECOND at peak! Probably incoming quotes. These would update internal cache within the bank. These "incoming" updates must be synchronized with other updates initiated from "within" the bank. Probably the trickiest technical challenge in this platform.

Most trades are institutional (often from wealth management firms) but there are retail trades as small as $5000/trade.

The treasury work-up process also takes place on some of these ECN's.

Most important products -- corporate bonds, CDS, CDX. 

(Based on a major credit trading sell-side.)

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