Bloomberg launches Portfolio Trading Basket Builder to boost workflow efficiency

2027
Paul Kaplan, Bloomberg

Bloomberg has launched its Portfolio Trading Basket Builder (PTBB) , an enhancement to its existing portfolio trading workflow, which incorporates reference to Bloomberg’s Evaluated Pricing Service (BVAL). The newly introduced functionality is designed to enable market participants to more efficiently and effectively integrate data, analytics, and communication tools in order to optimise the basket of bonds to be traded, prior to electronic execution.

“This is taking the original workflow for portfolio trading – which would have been conducted via an exchange of Excel sheets, both internally and externally, and leading to the dealer showing levels – and electronifying that workflow,” says Paul Kaplan, global head of Credit, Equities, TRS and Price Transparency at Bloomberg.

Bloomberg client can use the Basket Builder to create a portfolio basket by dragging and dropping securities from portfolios or monitors within Bloomberg, or from external files or their order management system (OMS).

“The combination of BVAL as a reference, and the data and communication tools available on the Bloomberg Terminal is what makes this unique,” he adds. “A lot of clients are benchmarked to the Bloomberg Barclays indices and/or they use BVAL as a pricing source for the end of day mark. So having the ability to use BVAL as a reference for when they are trading is huge for them. It means they can minimise tracking error either for the indices they are benchmarked to or to the price they use for end of day mark. We have clients who come in and say they want to use a 3pm spot or 4pm spot because they really want to hone in and get as close as possible to the level they use for their end of day.”

BVAL supplies transparent evaluated pricing for over 2.7 million securities across government, supranational, agency and corporate (GSAC) bonds, securitised products, municipals and curves daily.

This PTBB builds on the ‘RFQ to Many’ functionality for portfolio trading introduced by Bloomberg in December 2020. Once the optimal basket is created through Basket Builder, it can be traded on an all-or-none basis, via BOLT, Bloomberg’s list trading tool.

“Portfolio Trading Basket Builder allows for the pre-trade basket to include potential buys and sells,” explains Kaplan. “BOLT can then handle buying and selling in the same trade and the analytics reflect that.”

Traders can put up to six dealers in competition, and BVAL can be used as a reference, in addition to other market standard quote types and references. Currently the Basket Builder supports all investment grade (IG) and high yield (HY) credit, emerging markets (EM), supra-sovereign, sovereign and agency (SSA) bonds and some rates. US Treasuries, exchange traded funds and equity options will next be added to list trading and then portfolio trading.

Robert Simnick, Invesco

“Portfolio trading is an important part of today’s credit trading landscape. It enables firms to trade a basket of bonds quickly and efficiently, which is more important than ever in the current market environment,” said Robert Simnick, credit portfolio specialist at Invesco. “We are happy to see greater innovation in this space at a time when portfolio trading continues to gain traction.”

Kevin McPartland, Coalition Greenwich

“While portfolio trading is not new, its use and utility has grown steadily over the past few years.” said Kevin McPartland, Head of Market Structure & Technology Research at Coalition Greenwich. “As the tools used for portfolio trading continue to improve and expand, market participants will more easily unearth the liquidity and price improvement that portfolio trading can provide.”

Kaplan expands on that point, saying, “Portfolio trading allows people to get tighter bid-offer spreads for full baskets of securities so the clients we talk to like this way of trading. They see it as a real efficiency tool; some people use automation to get trades done faster and they are finding this to be another way to do that. It’s more manual but the analytics allow them to have a hands on approach to get the best liquidity and the best levels.”

The Basket Builder provides clients the ability to communicate internally across teams or trading desks, and supports communication between buy- and sell-side traders. Traders can analyze multiple portfolio trading data points, including net proceeds, average duration and liquidity scores.

They have the ability to compare basket and individual levels to multiple pricing sources including BVAL and the Composite Bloomberg Bond Trader (CBBT), a weighted average of dealer-contributed near real-time prices on Bloomberg’s Fixed Income Trading solution (FIT) during trading hours.

“We’ve had baskets that are IG and high yield, we’ve had combinations of those, baskets that are just EM or EM plus the others. Just last week we had the first multi-currency basket, and now we are having people do rates exclusive trades. Over time we expect people will want the ability to add ETFs, CDS and IRS into the basket and eventually expand into local currency EM. We are just starting to hit our stride.”

Bloomberg subscribers can access more information via PTBB on the Bloomberg Terminal.

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