The FIX Fixed Income Axe Standards Working Group is leading an initiative to improve the quality of axes in bond trading, in partnership with the International Capital Market Association (ICMA)
Increased electronic bond trading has increased demand for the tools, the group says, which show a trader’s indication of interest in buying or selling a security. This demand has, in turn, reduced the quality of the instruments, which the FIX Trading Community says is making price discovery and trading harder for buy- and sell-side traders.
Mike Poole, head of trading at Jupiter Asset Management, commented, “I’m confident this initiative will identify how we can improve data standards in ways that are practical for both sides. By doing so, we’ll be able to improve execution outcomes which will benefit the entire market.””
The working group plans to use FIX data standards to identify different types of liquidity and liquidity provider interest.
“Having a flag in an axe to identify ‘real’ positions would allow for better client and broker selection,” explained Matthew Coupe, FIX EMEA chair.
Beyond this, the group intends to create a standard report for platforms and trading venues to identify poor axe quality.
A joint discussion paper will be published by FIX and ICMA in future months.
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