Morgan Stanley
  • Sales and Trading

E-Markets: Offering Electronic Solutions for the Fixed-Income Business

Morgan Stanley’s Fixed Income Division recently formed a group to focus on providing electronic trading solutions to institutional clients: E-Markets. The goal of the E-Markets Group is to deploy execution solutions using the firm’s premier trading technology and infrastructure to clients across the most liquid fixed-income businesses: foreign exchange, rates and credit.

Morgan Stanley’s Fixed Income Division recently added the latest piece of a carefully thought-out strategy to address the evolution of fixed-income trading: the formation of the E-Markets Group. The team is committed to providing clients with solutions to access various sources of electronic liquidity, focusing on the evolving interest rate, credit and foreign exchange markets.

Morgan Stanley has been a pioneer in fixed-income electronic trading since its first signs of life in the late 1990s. While the paradigm of providing principal liquidity to clients through traditional voice channels still dominates, market structure changes, driven primarily by regulation and client demand, are overturning this paradigm. The firm is determined to remain an industry pioneer in augmenting legacy offerings with new methods of execution.

Keenly aware of the rapidly shifting landscape, Global Co-Heads of the Division, Michael Heaney and Robert Rooney had the foresight to “federalize” the effort across fixed-income product groups, creating a dedicated E-Markets Group with two recognized industry thought-leaders at the helm, Ciaran O’Flynn and Dexter Senft. This structure fosters consistent business strategy and client interfaces, while maintaining the critical expertise and ownership of trading revenue and associated risk within each business unit.

“Technology helps us to improve the efficient functioning of our day-to-day business and to offer better workflow solutions to our clients,” says O’Flynn. “By achieving those goals for ourselves and our clients, we simultaneously create a superior distribution platform that attracts and facilitates the execution of larger risk-transfer business.”

The E-Markets Group has internal and external objectives. Internally, it focuses on the deployment of tools to assist in pricing and hedging activities central to our market-making activities across asset classes and around the world. Externally, the focus is on helping clients digest market structure changes and achieve their goals. Providing clients with alternatives to traditional execution gives them valuable choices about where and how they want to execute. For example, one of the major changes being worked on will allow clients to work multi-legged trading strategies involving fixed-income cash, futures, swaps and foreign exchange products.

“Our vision for E-Markets is to become a one-stop shop for clients in fixed income, specifically foreign exchange, rates and credit,” says Senft. “Our E-Markets Group partners across the Division to deploy solutions for single and multi-asset class trading. There is one dedicated team to service the fixed-income business as a whole, focused on delivering the appropriate services to our internal and external clients alike, through whatever channels and tools they choose.”

The “electronification” of fixed income is a work in progress, as the foreign exchange, rates and credit markets all continue to evolve at different paces. Morgan Stanley’s recognition of this new and evolving market structure means working with our clients to deliver fixed-income products and services that meet their needs. The firm believes it is this approach, together with a multi-asset class platform, that truly resonates with clients.