The fixed income market loses its appeal in an environment marked by rising interest rates in the medium term and unattractive returns. As a consequence, investors are retiring from this class of more traditional assets and looking for profitability, assuming, of course, a little more risk. But, what if this trend was telling us something else?
For Kim Fournais, founder and CEO of Saxo Bank, fixed income markets are a glaring example of the slow adaptation to the digital age, in part because of the difficulty of operating digitally. “The full digitalization of fixed income markets requires cutting-edge technologies and a real will on the part of the financial institution to offer its customers better products and services,” he says.
In his opinion, for a long time, large institutional investors have had broad access to digital fixed-income operations, but operating fixed-income via platforms was not available to all investors. In this regard, he argues that, to date, “most fixed-income investors continue to have a strong dependence on telephone trading to buy and sell fixed-income products based on indicative price estimates within an opaque market. they often operate with a bank’s own book. We may see digital front-end when buying or selling fixed-income products online with the bank, but it is most likely that the operation is still carried out by telephone, as was the case in the foreign exchange market in the United States. 90’s”.
In response to this technological trend and in order that the investment in fixed income is not left behind, Fournais highlights the work done by his entity: “We have worked in a fixed income trading platform with a fully digital value chain that, thanks to a robot, it looks for the best price among 40 suppliers of fixed income products worldwide, which means that customers receive the best available price, offered by one of the leading international banks or liquidity providers. “
The platform offered by Saxo Bank allows investors to decide if they want to continue operating based on indicative price estimates provided by a single bank or otherwise prefer to have access to the best possible price among 40 sources of liquidity that include some of the financial entities biggest in the world.
“The industry has made great strides in the democratization of capital markets, but there are still high walls to be demolished, obsolete business models to be questioned, and we have to continue to transmit to the world everything we can offer and why it is so important for investors and traders, “says Fournais.