In volatile European bond markets, data remains king


In times of rapid change and great uncertainty, market participants turn to data. But how can they ensure they have access to the information they need in the markets in which they trade? Oliver Clark, Head of Product Development at MTS investigates.

High quality market data provides a compass to navigate unchartered waters, such as those in which bond traders now find themselves. Dramatic levels of volatility have led to record data usage, as participants look to trusted, verifiable information to inform critical trading decisions.

Recent months have seen a sharp surge in requests for access to fixed income data. In particular, participants have been seeking to expand the range of firm sources from which they receive data to act as a benchmark for trading decisions.

To operate effectively in volatile markets, participants need a wide range of data sources that provide detailed coverage of the markets in which they trade. Nowhere is this need more pressing than in European government bond markets.

The speed at which the markets deteriorated in March caught most by surprise. And as the economic impact of the pandemic sent shockwaves through the credit markets, depth and liquidity was significantly reduced, prices became volatile, sellers had trouble finding counterparties ready to buy at a reasonable price, and vice versa.

Against this backdrop, the ability to access real-time and executable prices from a broad range of markets is more essential than ever, helping participants to build a better picture of price formulation to inform effective trading strategies.

MTS offers a unique combination of high quality, detailed data packages and an innovative trading GUI that displays real-time price information direct from the leading interdealer European government bond markets.

The need for broader data

In times of volatility, not only do participants need more data, but they need data that covers a broader range of markets.

This is particularly true in European government bond markets, which are inherently interconnected. Informed trading decisions can only be made with an overview of prices and trends across all markets.

MTS data provides both live executable and real-time traded pricing on our platform. The data is sourced from the MTS Cash interdealer market, the MTS Repo market and the MTS BondsPro all-to-all market. These sources represent a diverse trading community which generates an average of 30 million quotes per day.

The majority of the electronic Euro-denominated government bond market volume has been traded on our markets for over 30 years, therefore our data can be regarded as a representation of trading data across these interconnected markets.

Data is a key component of our recently redesigned dealer to client platform, MTS BondVision. As well as creating a new, modern aesthetic for the interface, we wanted to put the most valuable features in the platform, such as the interdealer data, front and centre to make it easier and more intuitive to use. This data enhances both pre-trade analysis as well as supporting post-trade TCA for the buy-side.

Our heritage and reach in the European government bond markets means we are uniquely placed to help ensure participants have the breadth and depth of data they need to set best practice in price discovery, verification and validation.

Data is also crucial to our offering in the corporate bond and emerging market debt spaces, where our MTS BondsPro platform offers US and UK traders an innovative all-to-all model. Pre-trade data on the platform is derived from over 650 buy-side and sell-side market participants and is distributed in real-time. MTS BondsPro’s diverse liquidity providers consistently provide over 100,000 prices at a time on close to 20,000 different corporate bonds.

The need for faster data

Today’s bond markets move quickly – especially in times of uncertainty – and being able to access data at the right latency for your trading strategy is essential. And of course, these markets are more automated than ever before. When it comes to automation, low latency data is critical.

The reason so much importance is placed on data in the age of automation is straightforward: while a human trader can use intuition to guide themselves through unexpected market volatility, automated trading tools can only rely on the information that they are being fed.

This data needs to be representative of the entire market, cleaned and delivered at high speed if it is to facilitate successful automated trading on electronic platforms. One of the most crucial elements in the successful automation of hedging activity is having access to the most granular and up-to-date data.

As a facilitator of leading electronic fixed income markets in Europe, we recognise our role at the forefront of technological evolution in this space. We have developed a range of innovative automated trading functionalities across our platforms, backed by some of the richest and most comprehensive market data available.

Our MTS Cash platform delivers real-time interdealer pricing across the European government bond marketplace. It also offers the automated MidPrice functionality which offers an orderly method of price discovery, based on real executable market rates. It allows traders to view a continuous and dynamic mid-price and work large orders efficiently without moving the market.

MTS BondVision users also benefit from access to real-time data from the MTS Cash interdealer markets, delivered via the MTS BondVision GUI for no extra cost. We also offer one of the richest sources of historical government bond pricing and trade data in Europe. As fixed income markets experience unprecedented levels of volatility and uncertainty, our time series data delivers the depth and quality needed to help optimise research capabilities and build profitable strategies in this changing trading environment.

Time series data is generated directly from the MTS Cash interdealer platform and MTS Repo, which has facilitated the repo markets in Europe for over 20 years. Participants can choose from historical and end-of-day data packages providing daily market summary information and un-netted tick-by-tick pricing data.

Preparing for an uncertain future

The impact of the Covid-19 pandemic is reshaping the fixed income market in profound ways and will continue to do so over the coming years as governments seek to rebuild their economies and strengthen their resilience against future shocks.

For market participants steering their fixed income businesses through these uncertain times, access to data will remain paramount. And the depth, breadth and speed at which it is delivered will be the variables that enable a trader to retain their competitive edge.

MTS’s comprehensive suite of data analytics products supports all participants to understand their markets at a deep and detailed level. Whatever your trading needs, contact our data team today to discover the optimum package for your needs:

Disclosure: Securities Offered Through MTS Markets International, Inc. Member: FINRA/SIPC


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