Re-imagining Private Banking with MarketAxess Fixed-Income Trading Solutions

MarketAxess operates a leading, institutional electronic trading platform delivering expanded liquidity opportunities, improved execution quality and significant cost savings across global fixed-income markets. MarketAxess’ award-winning Open Trading™ marketplace is regarded as the preferred all-to-all trading solution in the global credit markets, creating a unique liquidity pool for a broad range of credit market participants. Drawing on its deep data and analytical resources, MarketAxess provides automated trading solutions, market data products and a range of pre- and post-trade services. As a result, a global network of over 1,700 firms, including the world’s leading asset managers, institutional broker-dealers and private banks, use MarketAxess’ trading technology to efficiently trade bonds. For the wealth management markets specifically, the firm offers its Axess IQ® integrated data and trading solution, which delivers relationship managers, advisors and traders with a state-of-the-art facility for enhancing fixed income advice and trade execution for private clients, at the same time as significantly boosting efficiency and enhancing the client outcomes and experience. Hubbis met with Erik Tham, the Zurich-based Head of Global Private Banking Product and Nirav Doshi, Senior Sales Relationship Manager for Asia Pacific, to learn more about MarketAxess’ latest solutions for the wealth sector and to hear how they are driving greater adoption in the Asia region.

Founded 22 years ago, MarketAxess has emerged as a leading force in institutional electronic trading in fixed-income securities, the largest capital market in the world. The firm’s long record of industry innovations and its continuously expanding global network have brought vast improvements in cost efficiency and transparency, benefiting the institutions, companies, and individuals who rely on these critical markets.

MarketAxess is headquartered in New York and has offices in London, Amsterdam, Boston, Chicago, Los Angeles, Miami, San Francisco, São Paulo, Hong Kong, Singapore, and Zurich.

Identifying the potential

Tham opens the conversation by zooming straight in on the private banking and wealth management community, explaining why the firm tailored its proprietary Axess IQ® solution for traders and relationship managers (RMs).

“The most taxing problem I faced when I worked at the fixed income trading desk of a global private bank was connecting the trading desk with the investment decision-makers,” he reports. “Basically, constant requests for indicative prices and market insights ate up a substantial portion of the day. This was a key problem I wanted to solve when I joined MarketAxess.”

The one-stop-shop

Axess IQ® was launched in November 2019, since then the firm has made continuous enhancements. “The efficient, low-touch and even no-touch automated execution tools offered by MarketAxess allow firms to quickly complete orders, supported with the confidence of industry-leading market data from the AI-powered Composite+™ pricing engine,” Tham reports. “Connecting sophisticated trading technology and market data in one central hub ultimately improves trading outcomes and supports a more seamless order management and execution workflow.”

He explains that Axess IQ®, the firm’s one-stop trading shop specifically designed for wealth managers and private banks, is now fully honed, and the firm has been building a client base around the world who sees the value in streamlining communication between RMs and the trading desks, thus trading client orders more efficiently than ever before.

“The Axess IQ® platform is our flagship solution for the whole private banking and trading community,” he explains. “I won’t go into too much detail here, but it has all the beauty and effectiveness of a Swiss army knife; it is totally fit for purpose.”

And he says Axess IQ® addresses transparency, efficiency, effectiveness and timeliness head-on. “For the RM community, without adequate visibility into markets, they really can’t accurately or optimally advise their clients on investment decisions,” he states.

Made to measure

Tham believes that data is the lifeblood of the modern world, and the simple fact is that RMs have struggled to easily access reliable and up-to-date fixed income data. And then, once a client and RM have perhaps made their investment decision, the RM faces challenges around communicating the order to the trading desk, tracking its progress and reporting back.

“To address all these issues, we tailored a special version of Axess IQ® specifically for RMs,” he reports. “All the great features we had built for traders – unparalleled market insight tools, streamlined order management, and efficiency enhancers - are all repackaged and designed specifically for the RM workflow.”

The result, he reports, is that the RM can now access almost the same data and market insights that the trading desk sees. “And they can drop orders into the trading desk’s order queue and use the same smart order management features to track those live orders.”

“Traders still retain full control of the trades and data, meaning that only the most relevant information is shared with the RMs. The archaic world of trading fixed income thus disappears and a new, streamlined, and highly efficient protocol arrives.”

Targeting wealth management

Tham steps back from the detail to offer some of the history of the 22-year-old firm in order to establish the context for his role and mission as Head of Private Banking since mid-2021.

“MarketAxess has traditionally been a trading platform more targeted towards asset managers, and large institutional investors,” he reports. “But when I joined MarketAxess in 2018 from UBS Wealth Management where I ran a trading desk and used MarketAxess' products, I took on the mission of helping the firm develop products and solutions that really help the private banking client community to grow.”

Understanding the PB landscape

Achieving that, he explains, required a deep appreciation of the motivations and aims of the wealth management community. “Armed with that understanding, we have been able to deliver digital solutions that really help drive alpha generation, far greater efficiency, all resulting in better RM productivity and improved client retention and satisfaction.”

Tham elaborates on these comments, noting that the MarketAxess' electronic trading platform delivers state-of-the-art pre-trade information to traders and RMs, also powered by AI and machine learning. MarketAxess’ AI pricing engine takes into account all the firm’s platform data and global trading activity and turns it into Composite Plus (CP+), a highly accurate real-time price indication for more than 250,000 bonds, achieving 100% coverage of the bonds outstanding in its defined markets. This means that traders and RMs don’t have to look for different sources and use different systems to get highest quality price information on bonds.

Out with the old, in with the new

“The old phone call to the traders disappears and is replaced by a real-time access to bespoke, tailored information for the RMs, available online” he reports. “The platform then delivers super-fast execution of orders and feeds full transparency back to the RMs, to relay on to their clients. Imagine numerous small orders in the private banks and how unwieldy that used to be, and then imagine how dramatically this solution enhances the flows, capabilities and the experience of the RMs and their clients.”

Tham also elaborates on how the solution helps drive alpha generation. “Simply, we provide probably the largest and deepest liquidity pool in credit fixed income products,” he reports. “In fixed income, you try to squeeze out basis points here and there.”

Valuable incremental gains

He explains that MarketAxess, beyond Axess IQ®, offers a comprehensive suite of trading functionalities from Single RFQ, List Trading, automation tools and most importantly a unique trading network called ‘Open Trading’, which is basically an all-to-all trading marketplace. “So, unlike in the old world of fixed income, where you might have a trading line with perhaps twenty dealers, MarketAxess allows you to send your request to all participants on the platform, thereby opening up a vast liquidity pool provided currently by north of 1800 participants. That helps drive alpha via access to a far broader and deeper liquidity pool.”

And he adds it saves clients money on the trades. “Every fraction of a basis point the trading desk can save on trades will go directly to the performance of these clients’ portfolios,” he states. In the first half of 2022, MarketAxess clients globally saved USD 438.8 million by using Open Trading.

MarketAxess easily integrates with other third-party OMSs and EMSs positioning itself as the ideal trading and data solution for private banks and wealth managers at any stage of their workflow evolution.

Plus points all round

Tham also drills down further into the issue of data quality and integrity. “There has been a dearth of fixed income data on which to help model the best outcomes and portfolios, but we have created trademarked, AI-powered Composite+ pricing engine, a solution that we have already proved helps significantly with price discovery and valuation,” he says.

And he also observes that fixed income trading automation – already a commodity feature in the US and Europe – is gradually spreading into Asia. “It is available, it is mature, and Asia is gradually catching up,” he states.

Nirav Doshi joined the firm in mid-2021 and, since July this year, has become Senior Sales Relationship Manager for Asia Pacific, responsible for building the regional client footprint across the private banking and hedge fund sectors as well as strengthening the Australian business. He offers his own views to reinforce the observations that Tham had proffered.

Pulling it all together

“The data element is crucial to pre-trade price discovery for the trading desk to efficiently and rapidly update their relationship managers to optimise the whole decision-making process,” Doshi observes.

“Data had been highly disparate, but our solutions pull that together seamlessly and easily, while our automation solutions are increasingly being adopted by the private bank community in the region to automatically execute ‘easier’ and ‘smaller’ tickets, based on specific parameters.”

“This enables traders to focus on the more complex tickets and products, where they can apply their market expertise to realise more value for private bank DPM and family office clients, who demand more of an institutional-level service.”

He expands on this, noting that Axess IQ®, MarketAxess’ private bank execution management system, is extremely sophisticated in terms of the simple things that PBs wanted to do but could not, such as order management, order queuing, order taking, best execution via the all-to-all liquidity functionality, and of course all with compliant processes and reporting built in.

Riding the waves

Tham also observes that the market dislocations of 2022 thus far are encouraging some major market shifts, such as a transition by investors back to fixed income, and away from higher-risk assets like equities.

“There is a clear shift to safer products, and investment grade debt is becoming more popular again, as well as shorter maturities,” he reports. “We are also seeing a shift to ESG-centricity in investment selection, and again our data helps RMs and investors curate those opportunities.”

Key priorities

Doshi reports that the mission within private banking in Asia is to make MarketAxess the ‘go-to’ bond electronic trading platform. The first step in the process is to increase MarketAxess’ brand equity among private banks and get them onboarded, which is typically a multi-month process. “We have notched up 12 so far, and we are building all the time,” he says.

Once the onboarding is done, the next step is to make sure the trader fully understands all the protocols, bells and whistles that MarketAxess delivers. For example, Doshi and colleagues aim to drive greater uptake of the MarketAxess automation protocols. “Our Auto-Responder solution, for example, allows customers to place resting orders that are then automatically acted upon,” he explains. “The various parties do not have to keep checking the market; the system does it for them.”

“Our solutions will make their lives easier; it is as simple as that,” he says. “Most importantly, we want them to appreciate all the different areas where we will help drive a more efficient RM-trader relationship, better execution and reporting.”

Simple goals, major advances

The final word goes to Tham, who says that the big picture is the digitisation and automation of activities of the private banks in the fixed income markets. “Our solutions play ideally to the wealth sector trend towards greater empowerment of the RMs, helping boost their skills, their advice, their efficiencies and freeing up their time for creativity, all of which leads directly to the overall enhancement of the RM relationship with their clients and greater client loyalty,” he explains. “Underlying all our sophisticated solutions are these immensely simple objectives. We have achieved considerable traction so far and we think there's much more to come.”

Getting Personal with Erik Tham

Erik Tham is 49 years old and comes originally from Southern Bavaria in Germany. He studied physics both in Germany and in the US at the University of Illinois at Urbana-Champaign. His early career saw him join a technology consulting company, and soon specialised in the world of fixed income, later joining UBS and moving to Switzerland. He now holds dual Swiss and German nationality.

In his role at UBS, he used MarketAxess solutions, and it was a natural move for him to join the firm in November 2018, first as Head of Private Banking for Benelux and Switzerland and then from mid-2021 as Head of Global Private Banking Product.

He is based in Zurich and married with three sons aged 23, 18 and 15, all of them also in Switzerland currently.

As usual with anyone based in Switzerland, he enjoys skiing and the outdoors life. He also has a long-term love affair with Italian motorbikes, owning an old Moto Guzzi, a 1995 Cagiva rally bike, and a very modern Aprilia.

“The Swiss mountain roads are great,” he says, “and ideal for motorbiking. I can strike out south from Zurich and enjoy those glorious roads and scenery, including some wonderful passes such as St. Gotthard, Susten or Grimsel. These are half day type trips and ideal for relaxation and fresh air.”

Getting Personal with Nirav Doshi

Nirav Doshi is a financial services professional with over 20 years of fixed income sales experience. He worked as a Strategy Consultant at Arthur D. Little’s Telecommunications Practice for five years, before spending six years in Structured Credit Sales at JPMorgan and later Barclays in New York. In 2008 he moved to Singapore, where he joined Goldman Sachs as Executive Director in Credit Sales for Asia-Pacific, spending eight years there before moving to CLSA until he joined MarketAxess in July 2021.

At MarketAxess, Nirav Doshi Nirav is building the firm’s regional client footprint across the private banking and hedge fund sectors, as well as strengthening the Australian business.

He hails originally from Kolkata in India, and later left to complete his BBA in Accounting from Angelo State University in Texas and then obtained his MBA from Columbia Business School in New York.

He recalls that his return to Asia in 2008 was driven significantly by wanting to reconnect the family with Asia, specifically with easy access to India. He remains happily married today, and two sons 20 and 17, the older boy at Boston University studying data science and the younger one planning to study electrical engineering starting in 2023.

In his spare time, Nirav enjoys rewarding himself for his hard work by imbibing some rather nice wines as well as honing his bartending skills to make some delightful Negronis and Manhattans.