More firms are turning to integrating with other systems as they address growing client needs for seamless workflows and contend with the ability to scale their business. However, barriers can impede integration, leading to firms having varying levels of success.
Since "fixed income markets are complex and bifurcated … we have to collaborate to provide services, as opposed to one company being the place to go for everything," Michael Ruvo, CEO of BondWave,
And with a market full of disparate products, integrations — while not unique to public finance — introduce firms to emerging technologies and new layers of complexity around software management and building processes that incorporate them into a "cohesive, tech-enabled workflow," said Dan Silva, CEO of Adaje, a cloud-based software platform.
"Partnership and integration with vendors is not just a competitive advantage — it's a necessity," said Jennifer Fredericks, a sales director at market data platform provider SOLVE. "By having a multitude of information sources at their fingertips, vendors can stay ahead of the curve, enhance their client support, and expand their service offerings. This interconnected approach is key to thriving in a landscape where agility and comprehensive solutions are paramount."
For example, True Market, which provides trading software for fixed-income securities, takes in real-time data from vendors and displays it in real-time for bond dealers, asset managers, and algo traders, said Charles Almond, CEO of True Market.
The firm recently announced a partnership with PIMCO, leveraging True Market's "advanced virtual private ATS technology and Software as a Service (SaaS) solutions, a press release noted.
By integrating True Market's platform-as-a-service solution, PIMCO hopes to enhance its workflow optimization for munis to address evolving marketplace needs, the release said.
"It's like having the benefit of a fully electronic trading platform, but it was made and built from the ground up to be a native cloud solution," Almond said of the integration. "We're adding and integrating the ability to take a framework and plug into the framework whatever data, liquidity or analytics are important to you. So you have a customizable, turnkey solution."
True Market has built a platform designed to accommodate the future of electronic trading, which will be "won" by sophisticated, big players; algo traders and market participants who create the next generation of technology, he said.
Some tech integrations stem from client demand, as market participants increasingly want all their information in one place. Without integrations, clients would be forced to toggle back and forth between various systems and platforms, referred to as a "swivel chair problem" by Almond.
"You're going through all these multiple [systems] as opposed to having all the data integrated into one place and create a workflow optimization tool" where market participants can access the real-time data, liquidity and analytics on one screen, he said.
Investortools, for instance, connects with over 40 outside firms to "add value" for its clients, said Jon Anderson, chief product officer at the firm.
Its Investortools Dealer Network consolidates the secondary market across 11 dealers and three ATS platforms, most recently partnering with SumRidge Partners, a tech-driven fixed-income market maker, to integrate SumRidge's live offerings into the IDN, according to a press release.
"We've always had the perspective of bringing multiple functions together because it enhances your decision," Anderson said.
"We're a firm that listens to our clients, and they've been telling us they want to see more and more information together," he said.
For the last 20 years, Investortools has focused on making its platform flexible and scalable, with the firm seeing a greater opportunity to streamline the process in the last five to 10 years, Anderson said.
"Some of this is client-driven, and some of this is us recognizing an opportunity and seeing where the market's going," he said.
However, some of these changes can take a while in the fixed-income market, but he noted these transitions are "speeding up" as the industry sees the greater benefits and efficiencies of integration, Anderson noted.
Part of the issue is many people in the muni market are not "technically equipped" to build stuff up quickly, said Matthew Smith, founder and CEO of Spline Data.
"If they can get it through one place and make use of it in that same place, it has a lot more value because there's not a lot of marginal work be done to use it," he said.
This, Smith said, is particularly true for some of the execution management systems, as it's beneficial for clients to have access to the pricing data in the platform they're using.
Spline Data, for example, delivers pricing through Munichain, a fintech firm, and True Market, the latter of which has built an "algo skeleton" used by some companies, he said.
"Everybody does something a little bit different, but some of them have overlap," Smith said. "The muni market is pretty small, so more often than not, folks work together, even if they're moderately competitive."
"We want to connect with more folks, but we're trying to find the right use cases," he added.
However, the road to integration with firms is not always easy.
Adaje
Adaje has integrated data from EMMA and other publicly available information, but ficc.ai is the only firm with which Adaje has done a "real" tech integration, Silva said, noting many of the larger, established legacy applications are not "particularly accommodating" to a startup software company.
"These larger, established companies don't have much incentive to play nice with the new entrances in the field. It's not worth their time most of the time … so you have to use something like Excel spreadsheets as a bridge between the two [applications] that lets you export and import into the other system," he said.
The integration with ficc.ai was very easy, and Adaje got "hooked up" quickly, but not every startup is "well positioned" for something like that, with the skill of engineers and how well things are architected potentially hindering integration, according to Silva.
However, while difficult in some cases, if firms choose to limit themselves by rejecting integrations with other systems, that affects the speed at which they can grow and impedes innovation, Smith said.
Munis have always been very slow to join the "technology revolution" that was happening in every other fixed-income asset class, Almond said.
"But it's exciting right now because there are some incredible new advances happening," he said. "It's exciting to see innovation because a lot all these innovations will lead to massive productivity in terms of efficiently, better using your time and being able to trade with more informed decisions."
