Neptune Networks, the fixed income pre-trade market utility, is upgrading to a new platform developed by Genesis Global to provide more data, analytics and customization as investors want more reliable fixed income data .
Neptune was set up as a non-profit organization in 2016 to allow institutional investors to access real-time bond pricing from banks in a standard format. Banks previously sent bond inventory information in multiple formats to investors while Neptune uses a standard open source format.
Gavin Collins, chief technology officer at Neptune, told Markets Media: “It’s a great time to be rebuilding a system as there is no better stress test than the peak market volatility we have seen during the pandemic and the last two quarters. The existing platform performed admirably without any issues, but we are sizing up the system to prepare for the future and massive volatility in the current markets.”
The new platform will launch in early July and retain all prior services and functionality while offering its 115 clients and dealers a new web interface and new features including single name credit default swaps, support for emerging market bonds and improved market analysis, including axe skews.
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Genesis began development of the new Neptune service in January and the platform’s low-code architecture makes it easy for services like Neptune to add features, datasets and analytics. Instead of having to change traditional code, Neptune can provide new data or functionality by adding modules or amending modules already in the system.
“The roll out has been very fast,” added Collins. “I've spent 20 years in banking on tech and software builds and it's exciting to see things done at such a fast pace.”
Collins said the Genesis platform will also help drive Neptune’s growth decisions as they will be based on usage data, allowing focus on the features the community most actively uses.
He highlighted that the addition of single name CDS demonstrates that Neptune can pivot more quickly. In the near-term, Neptune is looking at derived data it can offer clients to enhance their investment decisions and the firm is already working hard on enhanced data products and offerings, such as liquidity scores.
John Robinson, chief executive at Neptune Networks, said in a statement: “Adding single-name CDS and a host of other features are timely additions to our service and, going forward, Genesis enables us to update and upgrade our service with supreme speed. We have an exciting roadmap to supply even more data, analytics and customization to our global buy- and sell-side community.”
Demand for data
Many investors lack confidence in fixed income data and believe only half is really reliable according to a survey from Coalition Greenwich, Challenging Credit Markets Are a Call to Action for Traders. The consultancy conducted a series of qualitative interviews with a dozen traders from major buy-side and sell-side institutions in the U.S between March and May 2022.
The ability to use data as a liquidity indicator was mentioned by several traders in the study as being the most relevant use case.
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Audrey Blater, senior analyst focusing on risk and capital markets regulation on the market structure and technology team at Coalition Greenwich and author of the report, wrote: “If liquidity is the foundation of a trade, real-time, dynamic liquidity metrics are crucial to understanding the probability of execution. Further, the ability to efficiently execute on a real-time indication of liquidity is just as important.”
She added that traders indicated that vast amounts of fixed income data have become even less reliable, with volatility spikes and liquidity getting spotty which is creating winners and losers amongst firms which use data more effectively.
However, there is also a belief among bond investors that fixed income data will improve in accuracy and timeliness over time.
“Change is in the air, as traders want to achieve better ways to trade electronically with more emphasis placed on workflow efficiencies,” said Blater. “How quickly the buy side gets to this state will depend on the willingness of traders to accept that some of the workflows and methods they’ve relied on in the past just don’t cut it anymore, and that it’s time to try something new.”
Several buy-side traders and nearly 40% of study respondents said seamless integration with their order management and execution management systems providers is crucial for e-trading platforms to gain critical mass and make true progress toward more electronification and automation in corporate bond trading.
The new Neptune platform integrates with leading OMS, EMS and proprietary trading tools with a FIX API.
