New World, New Tools: US Treasury Trading - Is There More to Best-Ex than RFQ?

In recent years, fixed income has been beset by factors both internal and external that have tested its resilience. Periods of extreme and sudden volatility in 2014 prompted regulators to consider the structural integrity of US Treasuries. A joint agency study into the stability of the US treasury market and subsequent participant input on the topic underscored the importance of this market.

A prolonged environment of strained liquidity, cumbersome balance sheet constraints handicapping dealers, and inefficiencies that were brought to the fore as a result of new focus on the market’s well-being have set the stage for innovation. A major question on the mind of participants following the evolution of the UST market is whether long-held best-execution (best-ex) standards should evolve as well. Large institutional clients have begun to reconsider the long-standing status-quo of RFQ as the sole solution to rates trading. Investors have begun to investigate new methods of execution and means of leveraging trade data in new ways to augment the reliable RFQ models already in place.

This TABB Group report, “New World, New Tools: US Treasury Trading – Is There More to Best-Ex than RFQ?,”  assesses the degree to which the traditional UST trading ecosystem has evolved over the past few years. This report will detail new technologies and innovative ways in which market participants can leverage data and new execution workflows as a means to navigate the new UST trading landscape and examines the changing dynamic between anonymity, connectivity, and execution for market participants.