LTX, a subsidiary of Broadridge Financial Solutions Inc. (NYSE: BR), has announced RFQ+, a new enhanced Request for Quote (RFQ) protocol. The patent-pending protocol combines pre-trade dealer selection analytics and liquidity aggregation, thus allowing for the processing of larger trades by pooling multiple dealer responses.
Broadridge's LTX Presents Solution for Larger Trades
Despite growth in electronically traded volumes in recent years, larger trades are still generally executed bilaterally. A survey by The DESK in 2023 revealed that nearly 50% of mid-market credit asset managers avoid using e-trading for orders between $5-10 million. At the same time, 64% never use it for orders exceeding $10 million.
The role of the new protocol is to change that. RFQ+ supplements current RFQ workflows and is built on client feedback. Additionally, it integrates the AI-powered BondGPT, which is an application developed by OpenAI GPT-4 that answers bond-related questions.
"Executing size in today's credit markets is often challenging," Steve Chylinski, the Head of FI Trading at Eagle Asset Management, commented. "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."
RFQ+ tackles large transaction issues by merging AI-powered pre-trade Dealer Selection Scores with a unique liquidity aggregation function. Dealer Selection Scores aid buy-side clients in optimizing the number of dealers they interact with for each RFQ. It is based on real-time and historical input from the LTX Liquidity Cloud. The patent-pending technology connects bids and offers from multiple dealers, allowing buy-side clients to fulfil the block in one session.
"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," Jim Kwiatkowski, the CEO of LTX, expressed his enthusiasm for the new protocol. "This is the most recent example of LTX using emerging technologies to drive efficiency in the corporate bond market [for] the benefit of dealers and the buy side."
Over 30 dealers and over 80 asset managers have joined the LTX platform. LTX has recorded over $7 billion in firm orders and an average daily volume of over $25 billion in the Liquidity Cloud in Q1 2023.
Broadridge to Offer Faster Time to Markets
The global fintech company with over $5 billion in revenue constantly updates its trading offering to meet rising demand from its clients. In April, Broadridge launched a new trading solution. This service helps clients streamline trading, manage risks, and make smarter decisions. It also aids Broadridge Trading clients in improving scalability, speeding up market time, and cutting technology costs.
Justin Llewellyn-Jones, the Head of Capital Market Product Strategy at Broadridge, stressed the significance of this new tech in trading infrastructure.
"By using our unique ability to look across the front, middle, and back as a whole, we are helping our clients solve pain points through trade lifecycle simplification," Llewellyn-Jones commented.
Broadridge also confirmed UBS's successful intraday repo transaction via its DLR platform. This transaction involved an undisclosed Asian bank. Moreover, the company partnered with Atlas Responsible Investors, an impact-focused hedge fund manager. Through this, Broadridge provides technology updates to boost efficiency in mid-level offices and improve risk and asset management.
