BMA ruffles vendors with bond market matching proposals

BMA ruffles vendors with bond market matching proposals

The US Bond Market Association has issued a Request for Information for a proposed 'Common Message Hub' for electronic trade matching in the fixed income markets.

The RFI, issued by the technology committee of the BMA and the Asset Managers Forum, proposes the creation of an industry utility for electronically exchanging block trade information and allocation details for automated matching and processing.

The BMA says the move is part of a commitment to "eliminating phone and fax processing of institutional fixed income securities trades".

The idea was first trailed in December last year, but has so far met a lukewarm reception from third party STP vendors who resent a trade association muscling in on their commercial territory. Others question the viability of the project in the absence of a common messaging format for bond market trades and at a time of increased downward pressure on industry IT budgets.

The Association claims the Hub would conceivably enable buyside and sellside market participants to use the various facilities of vendors of utilities or alternative trading systems to electronically match customer trades, but accepts there may be some overlap in functional scope or target users.

A schematic of the proposals shows the Hub as an intelligent messaging system or piece of middleware, sitting between institutions and third party matching systems, include TradeWeb/MarketAxess, the DTCC, Omgeo, and other networks and service providers. Rules-based intelligent routing and data mapping capabilities would allow a single message to be directed to multiple destinations based on the message type, a user profile, or delivery instructions."

The Association says the Hub would provide a single point of access to matching services, decreasing the costs to firms of maintaining multiple network connections and consequently reducing operational risks.

"TBMA and AMF are looking for solutions that can be used by all market participants, regardless of technology expertise or budgets," the RFI document states. "For firms that are challenged by technology issues, the Common Message Hub is aimed at reducing the hurdles and enabling them to become part of an automated solution."

The BMA's vision of the Message Hub could ultimately push the middleware now being installed at the enterprise level from vendors such as Mercator and Netik out to be used as an industry resource, lessening the burden of custom implementations for industry participants.

Deadline for the submission of RFI responses is 4 April. The BMA says it may issue a more formal Request for Proposal (RFP) once all responses have been collated.

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