Delivering a dealer-to-dealer electronic trading platform for fixed income markets

The challenge:

After numerous conversations with its own clients, a Nasdaq-listed, leading derivatives marketplace that provides trading platforms for fixed income markets realized that there was an acute need for a comprehensive request for quote (RFQ) trading solution in the Repo segment of the bond market – an area that has been historically underserved by technology providers. However, the firm faced two key challenges with respect to realizing its vision:

1. Building a real-time workflow for a slow-moving market

The Repo market is well-known for having a slow-moving, multi-stage RFQ workflow that involves asset managers submitting an RFQ for a given security, followed by a bank review of the inquiry and their current view/position, which influences the decision to respond. Interested banks then submit their bid or offer with the security trade going to the banks that offer the highest bid/lowest offer. This lengthy process is frustrating for traders, and even less optimal for technology providers who make their living on keeping users actively engaged. In light of the challenges presented by the RFQ workflow, the firm needed to build a solution that could drive user adoption by integrating the solution into existing workflows, as well as solve common pain points including:

Infrequent trades due to ‘thin markets’.
Difficulties with price discovery caused by a lack of data.
The length of time required for banks to line up buyers/sellers.
Information leakage in situations where an RFQ was submitted to multiple dealers.

2. Delivery at the speed of innovation

The process of launching and deploying a new product involves an incredible number of moving parts that are often in tension with one another. The firm wanted to rapidly develop new features without compromising its ability to deliver a stable application to production, and more importantly, it needed the flexibility to iterate on and deploy updates to features and functionality quickly based on user feedback without putting too much burden on their clients.

Client:

A Nasdaq-listed,
leading derivatives
marketplace.

Product:

Fixed Income:
Dealer-to-Dealer
Electronic Platform.

Users:

Market participants
trading Repo in the
U.S. and Europe.

The solution

In response to these challenges, the firm built an advanced dealer-to-client RFQ trading solution designed to serve as a differentiated solution for the Repo market. To do so, it enlisted Adaptive, a firm that designs, builds, and operates electronic trading technology solutions for capital markets firms, and directly engaged OpenFin to unlock a variety of benefits including rapid deployment, delivery, and out-of-the-box solutions designed to support ease of use and sustained user adoption.

Throughout the process, there was a focus on optimizing the app for both the Repo market and the RFQ process, both of which require highly specialized solutions. The finished app includes significant enhancements to negotiation and RFQ workflow, allowing clients to execute with their counterparties with greater efficiency.

The decision to outsource development turned out to be a two-pronged accelerator – OpenFin eliminates longstanding development pain points such as versioning, while its Certified Development Partner, Adaptive excels in building high-performance electronic trading platforms, allowing the build to go as smoothly as possible. The resulting trading platform was officially rolled out for the European Repo market in May 2019.

How did we do it?

1. The development

One key component of the solution was targeted at reducing the friction caused by long-drawn out negotiations. RFQ trading platforms aim to solve some inefficiencies in real time chat/communication workflows between dealers and clients, but in this slow-moving, illiquid market neither clients nor dealers were keen on using an entirely separate application to trade instruments that could take hours, days or even weeks to execute. As a result, dealers and clients frequently conducted communication over chat or the phone.

OpenFin’s Notification Center was well suited to solving this problem, because it allowed the firm’s product team to specify a workflow that leveraged OpenFin’s use of notifications to draw users into the app at the appropriate time. By leveraging OpenFin’s Notifications API to provide this capability, users no longer had to keep checking the app without reason. Instead, the process was simplified to pushing out a basket of instruments to be priced, minimizing the app, and waiting for the price to come back later on. By automating the RFQ process for this relatively static market, the firm eliminated inefficient processes, as well as reduced the user errors that came with trading at this glacial pace allowing the firm to unlock workflow efficiencies for its clients.

Similarly, the firm leveraged OpenFin’s Interop API and Interactive Application Bus to power multi-window features and build a single-launcher application that users could use to launch internal tools and potentially additional products. For example, the firm’s clients have access to its analytics app, which provides them with individual trade performance and historical data to inform future trading decisions. OpenFin’s flexible architecture and emphasis on reducing friction for end users make this process of switching from app to app as painless as possible.

There are a lot of generic platforms available but the firm chose to leverage OpenFin and Adaptive to enable them to build a solution that specifically caters to the complexities of the Repo space. The f irm now has a truly differentiated offering that allows traders to carry out complex RFQ processes with ease and efficiency, which will accelerate the ongoing sophistication of this exciting sector.

2. Design & UX

The biggest challenge to delivering the solution that the firm needed was transforming an unconstrained negotiation workflow, which can differ widely between traders. Delivering a universal but flexible digital product that could work for all, required a solution that could not only support complex, multi-window experiences but also one that offered the ability to configure and personalize experiences without adding to the development timeline or cost.

Given that the firm actively engaged with its community of traders, it was also essential to ensure the design process and implementation remained open to feedback and flexible to change, so new concepts, ideas, and adjustments could f low into the solution.

Adaptive’s design-thinking leadership and user-centered design process, coupled with OpenFin’s versatile, Container solution allowed the firm to prototype, test, and refine interactions and experiences over short delivery cycles that took place in days, not weeks, resulting in a clear direction for the end product. This was particularly evident with the use of OpenFin’s drag and drop capabilities allowing for spreadsheets of data to be quickly added to kick off new negotiations.

3. Time to market & volume growth

This build had two key characteristics: speed and responsiveness. Within six months of beginning work with Adaptive, the client had an MVP that it began rolling out to select European clients. Since then, developers have continued to iterate in response to the firm’s client feedback working in two-week release cycles – a cadence made possible thanks to OpenFin, which allows for runtime environment updates that are effectively automated, allowing OpenFin to maintain co-stability with Chromium as well as eliminating common pain points caused by legacy software packaging processes.

“There are a lot of generic platforms out there. By leveraging OpenFin and Hydra we were able to rapidly build a solution that specifically caters to the complexities of the Repo space,” said Matt Barrett, Adaptive CEO and co-founder. “Our client now has a truly differentiated offering that allows traders to carry out complex RFQ processes with ease and efficiency, which will accelerate the ongoing sophistication of this exciting sector.”

4. Features utilized

The firm leveraged the following OpenFin features to help design and deliver its solution: OpenFin Container

Notification API
Platform API
Runtime

About OpenFin

Move Fast. Break Nothing. OpenFin is the operating system for enterprise productivity, enabling app distribution, workspace management and workflow automation. Used by 90% of global financial institutions, OpenFin deploys more than 3,500 desktop applications to more than 2,400 buy-side and sell-side firms. OpenFin investors include Bain Capital Ventures, Barclays, CME Ventures, DRW Venture Capital, HSBC, J.P. Morgan, NYCA Partners, Pivot Investment Partners, Standard Chartered and Wells Fargo Strategic Capital among others. The company is based in New York with offices in London and presence in Hong Kong.

3,500+ Desktops
2,400+ Buy-Side + Sell Side Firms
90% of Global Financial Institutions