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Future of Fixed Income: Part 2 - Beyond Bonds

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20 December 2021

Abstract

Fixed income infrastructure has a history of waves of increased automation. In turn, the tides of technology have reconfigured the operating landscape in the clearing, pretrade communication, price dissemination, execution, and post-trade workflows. Not surprisingly, a firm’s success has been tied to how well prepared they are to respond and participate in the wake of these changes.

Once again, fixed income is amid the wave of change driven by several factors. New SaaS providers riding the advent of cloud adoption, continued sourcing of value from increased involvement in workflows traditionally part of the middle and back office, innovation, and COVID-related accelerated demand for increased efficiency and control as well as the potential for regulatory changes are causing a swell in the reengineering of workflows. Once again, participating in, positioning for, and influencing the direction of these changes will have an impact on a firm’s success.

This report charts this evolution by providing context for the drivers of this next wave of change and identifying the opportunities to participate. In some cases, the groundswell of innovation will create new sources of opportunity to increase revenue. In other cases, innovation will lead to a reduction in a firm’s operating costs by creating capital or operational efficiencies. In both, firms should position for the changes as they invest in their technology.

Areas of focus comprise Flow Rates trading, collateral management and securities finance, advances in the use of networks and shared ledgers, and the technological implications of moving to a more collaborative world.